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Goosehead Insurance Reports Strong Growth Amidst Market Challenges

Goosehead Insurance continues to expand its franchise model, illustrating a notable shift in business strategy

Incorporating corporate agents into franchise ownership in less saturated areas has proven beneficial. These agents tend to remain longer and drive better performance. For instance, Tyler Silver, who transitioned from corporate agent to franchise owner, generated over $100,000 in new business revenue in his first year—a significant achievement. Tyler joined Goosehead four years ago in Fort Worth after being recruited from the University of Florida. Originally from North Carolina, he honed his sales and leadership skills before opening his franchise in Raleigh a year ago. Now, he has created a strong network of referral partners and is on track to build a robust franchise operation.

In addition, Goosehead’s agency staffing program (ASP) has effectively sourced new agents for existing franchises. Through the first nine months of this year, scaling franchises have onboarded over 500 producers, with ASP contributing to roughly half of these new hires. Producers recruited via this program have generated more than $1 million in incremental recurring revenue. As a result, the average number of agents per franchise has increased from 1.6 to 1.9 since last year. The company aims to boost this metric further, positioning itself for exponential growth.

To attract more qualified franchises across the U.S., Goosehead has doubled its franchise development team size in recent months. In Q3 alone, the company added 30 new franchises from 17 different states.

This talented group of franchise owners supports Goosehead’s goal to diversify its agent workforce nationwide. After reorganizing its franchise base over the last couple of years, the company’s financial health has entered a positive trajectory. In Q3, only 36 operating franchises exited the system compared to 89 a year earlier, reflecting the stricter compliance standards now in place. Equally important is the focus on enhancing productivity among agents.

Market conditions in both the insurance and housing sectors can impact agent productivity. Despite these external factors, Goosehead is concentrating on internal strategies. To address market challenges, the company has refined its agent training programs and enhanced referral marketing tactics, resulting in improved lead generation. Franchise productivity increased by 52% year-over-year, thanks in part to more active referral partners and the successful conversion of high-performing corporate agents into franchise owners.

Franchises with more refined sales processes generally show higher productivity levels. On the corporate side, investments are being made to grow capacity, which might temporarily lower productivity and tenure. Nonetheless, Goosehead believes its corporate sales team is now better positioned for future growth.

Turning to market specifics, while auto insurance conditions are improving, the homeowners’ market continues to face challenges. However, there are indications that it may stabilize, especially as carriers adjust policies and pricing structures. Currently, the financial implications of recent hurricanes affecting Florida, Georgia, and North Carolina remain uncertain, and the company expresses its heartfelt concern for those impacted.

Despite ongoing turbulence, Goosehead is reporting progress in client retention. Retention rates remained steady at 84% from Q2 to Q3, reversing earlier declines caused by rising premium rates. This stability has contributed to policy in force growth accelerating to 12% in Q3, advancing from 11% in Q2. The outlook remains optimistic, with expectations that retention will eventually return to previous peak levels.

In conclusion, the organization has made significant strides by bolstering its recruiting efforts, enhancing retention rates, and improving margins. The achievement of reaching $1 billion in quarterly premiums is a fitting testament to the hard work of employees, franchise partners, and carriers.

Mark E. Jones — Chief Financial Officer

Thank you, Mark. Good afternoon, everyone on the call. Our third-quarter results reflect strong growth momentum despite the ongoing challenges in the insurance and real estate sectors. Our business model demonstrates resilience, enabling us to achieve growth and improved margins in a variety of economic conditions.

As premium rates level off, we are seeing more available products, which allows us to enhance new business production and maintain higher renewal retention. We have chosen to maintain focus on our core competencies, rather than expand into new areas that may jeopardize our business. Operating in the prime sector of the insurance value chain allows us to stay concentrated on personal lines insurance brokerage.

Looking ahead, the growth potential is significant, as we currently hold less than 1% of the $480 billion U.S. personal lines market. With a solid competitive advantage, our commitment to long-term goals remains unwavering.

As of the end of the quarter, total franchise producers reached 2,093, up from 1,995 in Q2 2024. The agency force continues to strengthen, increasing producers per franchise for the seventh consecutive quarter to 1.9. This statistic is vital, as onboarding each producer enhances the overall productivity of the franchise.

Goosehead Insurance Reports Impressive Growth in Third Quarter

Franchise Success Drives Positive Financial Trends

The company’s franchises are thriving, showing significant progress with same-store sales rising by 26% when compared to last year. Additionally, the average gross pay for franchises climbed 56% this quarter versus the prior year. Goosehead believes that investing in franchise development for larger agencies is key for long-term growth.

Commitment to Franchise Development

Goosehead remains dedicated to helping franchises maximize their potential through investments in training and technology. As of the end of the quarter, the number of corporate producers rose to 458, marking a 45% increase from 316 a year ago. Early indications suggest that the current summer recruiting class is among the strongest they’ve seen, paving the way for future growth in corporate agents.

Record Premiums and Reassurance in Revenue Growth

In financial performance, total written premiums surged 28% year-over-year to reach $1 billion for the first time in the company’s history. Notably, franchise premiums grew to $825 million, a 33% increase, while corporate premiums rose by 12% to $204 million. This boost in productivity and steady client retention provides a solid foundation for continued premium growth in the near future.

Stability in Operations and Revenue Fluctuations

During the latest quarter, total revenues increased to $78 million, a 10% rise from the same period last year, with core revenues at $73.5 million, up 16%. Following a substantial reduction in franchise turnover, cost recovery revenue dropped 40% to $1.6 million. This change reflects the overall stability within the franchise network, with only 36 agencies terminated or transferred compared to 89 in the previous year.

Adjusting Expectations for Future Commissions

While ancillary revenues, which include contingent commissions, fell by 44% to $2.9 million year-over-year, there may be a chance for increased commissions by the end of the year given improvements in loss ratios from carrier partners. The health of the auto market and stability in home insurance lead to an optimistic outlook for contingent commissions in 2025.

Effective Management and Future Growth Prospects

Goosehead aims to be the most efficient distributor for their carriers, leveraging technology and a broad agent network. As a result, policies in force reached 1.6 million, a 12% increase from the previous quarter. This marks a turnaround after 13 quarters of stagnation, signaling potential for ongoing growth as agents enhance their productivity.

Continued Focus on Profitability

Adjusted EBITDA for the quarter improved to $26.1 million, reflecting a 17% increase compared to last year, and the adjusted EBITDA margin grew to 34%. Goosehead maintains a disciplined approach to cost management while investing in essential areas such as technology and human capital.

Strategically Managing Debt and Shareholder Value

The company reported operating cash flow of $59 million, up from $37.4 million—an increase of 58%. With $50.1 million in cash and $74.8 million available on their credit line, Goosehead’s debt is comfortably managed, maintaining a ratio of 1.2 times EBITDA. They intend to continue a conservative approach to leverage while exploring options for new financing.

Revised Guidance for 2024

Goosehead is raising its performance expectations for the full year of 2024. Total written premiums are anticipated to be between $3.7 billion and $3.82 billion, indicating a growth rate of 25% to 29%. Revenues are projected between $295 million and $310 million, and adjusted EBITDA margins are expected to expand throughout the year.

Gratitude is extended to clients, partners, and franchisees for their roles in achieving a successful quarter. With that, we invite questions.

Questions & Answers:

Operator

Thank you. [Operator instructions] One moment for our first question. Our first question comes from Matt Carletti from Citizens JMP.

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Market Update: Product Availability and Client Retention Insights

Matt Carletti — Analyst

Thank you, and good afternoon. Mark Miller, you mentioned market stabilization concerning product availability. Could you elaborate on this, particularly in key regions like Texas and California where product availability has been more challenging?

Mark Miller — Chairman and Chief Executive Officer

Hi, Matt, hope you’re doing well. As I mentioned earlier, the auto product is starting to make a comeback. Carriers are revising their home products, which gives me confidence that more products will soon be available in challenging markets like Texas. When I refer to changing their products, I’m talking about aspects such as depreciable roofs and higher deductibles.

We’ve had discussions with many carriers. I expect a quick flow of products back into the market, though I can’t pinpoint when exactly. While we still offer several products in every market, the availability is currently thinner.

Matt Carletti — Analyst

That’s insightful. Now, regarding G&A expenses, I noticed they decreased significantly this quarter—about $1.5 million lower than earlier in the year. Is there anything in particular that we should take note of in this number moving forward?

Mark E. Jones — Chief Financial Officer

No one-time expenses or unusual items to highlight here. We have been very disciplined in our investment approach. It’s essential to make necessary investments for future growth, but we’re also cautious about deferring anything that can wait.

Matt Carletti — Analyst

Thanks for the clarification. I appreciate your insights.

Mark E. Jones — Chief Financial Officer

Thank you, Matt.

Operator

Next, we have Brian Meredith from UBS. Your line is open.

Brian Meredith — Analyst

Thank you. I have a couple of questions. First, could you discuss how competitive your products are in areas like Texas and California, especially in relation to captives? Are you noticing any rate increases among captives? Is your product competitive in this environment?

Mark Miller — Chairman and Chief Executive Officer

Hello, Brian. Yes, our products are competitive in most areas, though not as much as they used to be against captives. We are observing captives beginning to increase prices, while our carriers are initiating price increases as well, leading to market stabilization. Despite a tough housing market, we still see good lead flow and suitable products available for sale.

Brian Meredith — Analyst

Understood. However, some carriers on your platform are pulling back. Can you confirm that?

Mark Miller — Chairman and Chief Executive Officer

Yes, that’s correct. While I won’t specify names, some carriers are currently pausing operations in certain markets. These are excellent partners for us, and we anticipate they will eventually come back into the market.

Brian Meredith — Analyst

Thank you for that. My next question pertains to client retention. Do you believe we have hit the lowest point at 84%, and can we expect gradual improvement, or is there a chance for a decline again?

Mark E. Jones — Chief Financial Officer

This is Mark Jones. Our client retention decline has been primarily influenced by pricing strategies. In the third quarter, we experienced less price increase than previously, leading to improved retention. Assuming stable pricing moving forward, we expect our client retention to remain steady and gradually increase through 2025, although fluctuations may occur in any quarter.

Brian Meredith — Analyst

That’s helpful information. Thank you.

Mark E. Jones — Chief Financial Officer

Thanks, Brian.

Operator

Next up, we have Tommy McJoynt from KBW. Your line is open.

Tommy McJoynt-Griffith — Analyst

Thanks for taking my questions. Regarding the new referral partner activations, are you diversifying away from home sale sources? Also, can you discuss how your corporate class is performing given the challenges in home sale volumes?

Mark Miller — Chairman and Chief Executive Officer

Our primary strategy will still focus on home closing transactions. Once we establish a lead with a referral partner, they tend to continue sending leads. If lead volumes drop, we proactively seek new referral partners to maintain our flow.

Mark E. Jones — Chief Financial Officer

It’s vital to note that we still represent only around 5% of the national market share for new home closings, indicating significant growth potential in various geographies, including Texas. We aim to align our agent presence with carrier demand effectively.

Mark Miller — Chairman and Chief Executive Officer

Regarding new agents, it’s still early to evaluate their performance. This class just recently started and includes many recent graduates. However, initial performance indicators are promising and suggest we may have recruited our highest quality class to date.

Mark E. Jones — Chief Financial Officer

From an adjusted perspective over the last decade, their productivity appears on par or even better than last year’s class, which was also strong. Despite the challenging market, these new agents are adapting well.

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Insurance Firm Sees Steady Growth Amid Hurricane Challenges

This quarter, our agents excelled in securing leads, even with the continued uncertainty in the housing market.

Tommy McJoynt-Griffith — Analyst

Thank you for that update. Did the recent hurricanes have a significant effect on your revenue for this quarter, particularly with Hurricane Helene and the upcoming potential impact from Hurricane Milton?

Mark E. Jones — Chief Financial Officer

Typically, hurricanes prompt insurance carriers to impose a temporary halt on new business in affected areas. Consequently, there’s usually a decrease in production for about one to two weeks, followed by a return to usual levels. Since Hurricane Helene occurred at the end of the quarter, we couldn’t capture any changes in our numbers until after it passed.

As for Hurricane Milton, the procedural timing meant that while it may shift some business from one quarter to the next, it generally doesn’t affect long-term business trends.

Tommy McJoynt-Griffith — Analyst

Understood. Can you provide an estimate of the revenue impact from Hurricane Helene since it occurred so late in the quarter?

Mark E. Jones — Chief Financial Officer

It’s difficult to quantify specifically, but Florida, where we have a considerable number of agents, is likely a significant factor.

Tommy McJoynt-Griffith — Analyst

That makes sense, thank you.

Operator

Thank you. Our next question comes from Michael Zaremski from BMO. Please go ahead.

Michael Zaremski — Analyst

Good afternoon. I have a couple of questions regarding your revenue and premium guidance. It seems surprising that the high and low end of revenue projections is still quite wide this late in the year. Could you clarify what factors could influence moving toward either end of that range?

Mark E. Jones — Chief Financial Officer

We’re navigating a volatile market. Variability in product availability and shifts in contingencies could influence our total revenue. We expect clearer insights by late November, when we will better understand loss data. These factors can meaningfully alter revenue expectations. Despite improvements in our core loss ratio, which could affect the lower revenue forecast, the franchise side of our business is performing exceptionally well. It’s important to note that premium impacts are immediate, while revenue recognizes just 20% of that premium in the first year.

Our less-than-one-year franchise productivity has surged by 133% year over year, which bodes well for future growth.

Michael Zaremski — Analyst

That’s helpful to know. Regarding your guidance for the fourth quarter, it suggests a significant improvement in the ratio of revenue to premiums. It seems primarily driven by corporate growth outpacing franchises. Can you explain what’s causing this and if it represents a permanent shift?

Mark E. Jones — Chief Financial Officer

The contingent factors I previously mentioned have a major impact on revenue, without influencing premiums. These contingencies can lead to drastic changes in revenue relative to premium numbers each quarter.

Michael Zaremski — Analyst

Got it. Lastly, could you update us on corporate agent growth and franchise expansion? Your recent hiring numbers seem stronger than anticipated. Should we expect a similar growth rate next year?

Mark Miller — Chairman and Chief Executive Officer

Correct. Most corporate hires occurred during the summer, and we are eager to begin the recruitment for next year’s class soon. We aim to diversify our hiring further, particularly with our new office in Phoenix offering more capacity. We have high hopes for the current group of agents, recognizing that some attrition may occur before year-end. Next summer, we will focus heavily on recruiting again, but I’m optimistic about the quality of our recent hires.

On the franchise front, we’ve reduced the number of lower-performing franchises. In this quarter, we added about 30 high-quality franchises, which reflects our commitment to prioritizing quality over quantity. Enhancing our franchise development team has been pivotal, and our agents are increasingly able to recruit their own new producers, further strengthening our network.

Franchise Growth Soars as Company Reports Strong Financial Metrics

Recently, we discussed the addition of 500 producers to the franchise community, with 50% arriving through the ASP program. This initiative is proving effective. Notably, Mark Jones, Jr. highlighted an impressive stat: first-year franchise productivity has surged by 133%. This figure reinforces the quality of the franchises being added.

Michael Zaremski — Analyst

Alright. That’s insightful. Just a quick follow-up: Regarding the growth of corporate sales agents from Q2 to Q3, should we consider any one-time factors as we look ahead to 3Q ’25? Or was this simply a strong recruiting year, suggesting we’ll follow similar processes next year if conditions allow?

Mark E. Jones — Chief Financial Officer

There’s nothing one-time about this growth. I expect the increase from Q2 to Q3 to be replicated next year. The focus is on developing enough managers to support the increasing number of agents, ensuring we do not overload our management team. Our goal is to keep expanding the corporate team to enhance leadership opportunities while facilitating the launch of new franchises across the nation. Continued investment in this area is crucial.

Mark Miller — Chairman and Chief Executive Officer

The progress you’re seeing aligns with our strategy from last year, which involved strengthening the talent acquisition team. Recruiting talent from college campuses can take time, and now we’re beginning to see the fruits of these efforts with our first class of world-class talent acquisition specialists bringing in new candidates.

Michael Zaremski — Analyst

If you don’t mind, I have another follow-up. Regarding agent growth, which has outpaced expectations, will this have any short-term negative impact on margins? It hasn’t affected this quarter, but could it in the future?

Mark E. Jones — Chief Financial Officer

Our new agents have ramped up productivity quickly, which positively impacts our profit and loss statements. Although we anticipate some additional expenses in compensation and benefits for the fourth quarter, as many agents did not start on July 1, their productivity should be sufficient to nearly balance out those costs.

Michael Zaremski — Analyst

Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from Mark Hughes from Truist Securities. Your line is now open.

Mark Hughes — Analyst

Good afternoon. You mentioned a 35-basis-point guidance for contingents this year. Does this suggest a significant increase in absolute dollars related to contingent commissions? Do you have good visibility on that?

Mark E. Jones — Chief Financial Officer

As stated in our initial remarks, we have expected 35 basis points of total written premium as contingents for the year. Given our solid core loss ratios with major underwriters, there appears to be potential for upward adjustment. However, this will only be clarified in the fourth quarter, creating some uncertainty. Based on current performance and efforts to enhance carrier profitability, we anticipate a higher outlook for contingents this year and likely into next year.

Mark Hughes — Analyst

Thank you. Regarding core revenue in relation to written premium, you discussed this earlier. Is there any specific mix—like homeowners versus auto or geography—affecting this relationship, causing written premium to outpace core revenue?

Mark E. Jones — Chief Financial Officer

Not really. The discrepancy arises mostly from franchise performance. Accelerated new business production in franchises increases premiums at a faster rate than core revenue since revenue capture is significantly lower. When franchises grow consistently year over year, as they have this year, you will see this gap widen.

Mark Hughes — Analyst

Thank you very much.

Operator

Thank you. One moment for our next question. Our next question comes from Andrew Kligerman from TD Cowen. Your line is now open.

Andrew, if you are on mute, please unmute your line.

Andrew Kligerman — Analyst

Can you hear me now? Can you hear me?

Mark E. Jones — Chief Financial Officer

Yes, we can hear you, Andrew.

Andrew Kligerman — Analyst

Great. Your EBITDA margin stands strong at 34%, which is a 190 basis-point increase year over year. Analyzing the various components, I see expenses, interest, depreciation, and taxes are all lower than anticipated. Typically, they fluctuate year over year. Last quarter, EBITDA dipped compared to the same quarter last year. Can you shed light on each expense line item and whether sustaining a 190 basis-point increase year over year is feasible, considering your guidance suggests margins will rise annually?

Mark E. Jones — Chief Financial Officer

Andrew, I anticipate our adjusted EBITDA margin will continue to rise year over year, particularly when excluding contingencies. I won’t provide specific margin numbers, but regarding cost growth, the onboarding timeline for new employees is critical. We typically onboard service personnel before sales agents, resulting in noticeable increases in compensation and benefits during the second and third quarters compared to the first. General and administrative expenses may vary depending on the circumstances of each year. For instance, launching the new Phoenix office in the fourth quarter will likely cause a slight uptick in G&A expenses related to its establishment.

Corporate Agents Thrive Amid Market Changes, CFO Discusses Expense Management

Executives at a recent conference call highlighted the move of agents from Texas to the Phoenix area and discussed a focus on maintaining margin growth.

Andrew Kligerman — Analyst

Could you provide insight into the year-over-year margin performance for the fourth quarter?

Mark E. Jones — Chief Financial Officer

Absolutely.

Andrew Kligerman — Analyst

Great. Let’s talk more about the corporate agents. It’s impressive to see that the number of new agents with less than a year of experience jumped to 277 this quarter from 132 last year. With the new Phoenix office, it seems like this number could significantly grow next year. Why do you believe this class of corporate agents is of such high quality?

Mark Miller — Chairman and Chief Executive Officer

The quality stems from our rigorous recruiting standards and the expanded efforts we’ve made to attract talent. During COVID, our criteria were less stringent, but we have since elevated our recruiting processes. We are actively reaching out to college campuses and running thorough interviews to find the best candidates.

Mark E. Jones — Chief Financial Officer

Additionally, we revamped our training and onboarding programs to enhance efficiency, which speeds up the learning process for our new agents. They’re entering the industry at a time when product options are limited, but they’re still performing admirably. As market conditions improve, we expect even better results from these agents, especially as housing trends begin to recover.

Andrew Kligerman — Analyst

This is encouraging news. Could you provide an update on the pricing dynamics among captives, particularly State Farm? Are they stabilizing, or is pricing still dropping due to competition?

Mark E. Jones — Chief Financial Officer

Every market has different dynamics. Our competitiveness depends on how other companies fare in pricing within specific regions. While I can’t give specific details about State Farm’s pricing, we remain committed to leveraging our technology and maintaining strong relationships with carriers to offer our agents the best products.

Andrew Kligerman — Analyst

Do you feel your carriers are improving their position relative to captive companies?

Mark E. Jones — Chief Financial Officer

It varies by region. There are nuances to consider in each market.

Andrew Kligerman — Analyst

Thanks for that. I appreciate your insights.

Operator

Thank you. Next, we’ll hear from Pablo Singzon from JPMorgan Chase. Your line is now open.

Pablo Singzon — JPMorgan Chase and Company — Analyst

Thanks for taking my question. I’m interested in your perspective on how long the current homeowners’ insurance pricing environment might last. Once it stabilizes, how will it benefit your pricing and exposure?

Mark E. Jones — Chief Financial Officer

Predicting this has been challenging. What I can say is that regardless of pricing fluctuations, our business model is naturally hedged. When homeowners’ insurance pricing levels off, we tend to see an increase in client retention, which preserves our earnings. Our profit primarily comes from renewals, so stable pricing benefits our bottom line.

Pablo Singzon — JPMorgan Chase and Company — Analyst

Thank you. My second question highlights your effective expense management, particularly with G&A costs rising only 2%. Could you elaborate on your approach to maintaining these low growth numbers and what to expect moving forward?

Mark E. Jones — Chief Financial Officer

Following our first-quarter revenue guidance adjustment, we reassessed our investments for 2024 to ensure they align with our growth strategy. While it’s likely we’ll see a slower growth rate in G&A compared to revenue growth in the coming years, I cannot provide a specific growth forecast.

Pablo Singzon — JPMorgan Chase and Company — Analyst

That makes sense. One last question: Could you provide the written premiums for your corporate and franchising channels?

Mark E. Jones — Chief Financial Officer

This information was likely included in our earlier remarks. If not, the details will be available in the upcoming 10-Q report.

Pablo Singzon — JPMorgan Chase and Company — Analyst

Thank you for your assistance.

Mark E. Jones — Chief Financial Officer

No problem.

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Goosehead Insurance Discusses New Corporate Office and Current Market Trends

Operator

Thank you. One moment for our next question. Our next inquiry comes from Scott Heleniak from RBC Capital Markets. Your line is now open.

Scott Heleniak — RBC Capital Markets — Analyst

Thank you. Could you provide more details about the new corporate office in Phoenix? Specifically, how does this relate to your current market presence and what opportunities do you see in the western region compared to your existing locations? What prompted this move?

Mark E. Jones — Chief Financial Officer

Certainly. When determining a location for a new corporate office—which we haven’t established in several years—we evaluate our existing coverage and franchise presence. In Arizona, we have some solid franchises, but our overall presence remains limited, particularly in California and other Western states.

Tempe, for instance, offers a strong feeder program which supports our needs. Additionally, the carrier environment in Arizona looks favorable for us, and there are promising areas in California as well.

While we have no immediate plans for a California office, our evaluation criteria remains consistent across all markets.

Scott Heleniak — RBC Capital Markets — Analyst

Understood. Thank you for the clarification. Shifting gears, can you share your observations on shopping activity over the past few months compared to earlier quarters? Is there any indication that it has calmed down, or does it appear to be peaking? What insights do your agents have from the field?

Mark E. Jones — Chief Financial Officer

Unfortunately, I can’t say that things have settled down. While we did see a minor slowdown in pricing during the third quarter compared to the second, shopping activity remains active. Personally, my insurance increased by 30% and my deductible doubled, which isn’t ideal. This goes to show there’s still significant shopping activity happening in the market. The increased effort by our agents has led to impressive productivity levels despite the challenges.

Scott Heleniak — RBC Capital Markets — Analyst

Thank you for that insight.

Mark E. Jones — Chief Financial Officer

No problem.

Operator

Thank you. One moment for our next question. Our next question comes from Katie Sakys from Autonomous Research. Your line is now open.

Katie Sakys — Autonomous Research — Analyst

Hi there, good evening. I’d like to revisit the topic of margin expansion, particularly as we look ahead to 2025. You mentioned that the last half of this year would show strong growth; are we expecting a similar pattern going forward?

Mark E. Jones — Chief Financial Officer

When considering earnings seasonality, it’s important to note that contingencies can significantly influence margins from one quarter to another. Typically, we gain more clarity on our contingencies in the third and fourth quarters than in the first half of the year. This usually drives margin improvements during that period. Additionally, as we onboard new producers in late May and June, we see increased productivity which correlates with a rise in new business production. Thus, you might expect EBITDA growth to follow this seasonal pattern along with stronger year-over-year margin expansion.

Katie Sakys — Autonomous Research — Analyst

That’s very helpful, thank you. You also mentioned that the current class of corporate recruits has slightly different economic impacts than previous cohorts. Could you elaborate on how those differences may influence margins after their first year?

Mark Miller — Chairman and Chief Executive Officer

To clarify, I was discussing our approach to agent retention rather than commission structures or workload. So, there shouldn’t be any significant changes to our economic model.

Katie Sakys — Autonomous Research — Analyst

Understood, thank you. Given this new class’s improved productivity, how might that impact margins differently compared to past groups after their first year?

Mark E. Jones — Chief Financial Officer

If productivity is higher, we generally expect better margins with the same number of agents. Our focus is on enhancing agent retention to ensure they experience the full benefits of our systems in comparison to other job opportunities available. This strategy shouldn’t alter the existing financial modeling for corporate agents.

Katie Sakys — Autonomous Research — Analyst

Thank you for that clarification.

Mark E. Jones — Chief Financial Officer

No problem.

Operator

Thank you. I’d like to turn the call back over to CEO Mark Miller.

Mark Miller — Chairman and Chief Executive Officer

Thank you to everyone for joining us today. I appreciate your continued investment and support. We look forward to speaking again in February.

Operator

[Operator signoff]

Duration: 0 minutes

Call Participants:

Dan Farrell — Vice President, Capital Markets

Mark Miller — Chairman and Chief Executive Officer

Mark E. Jones — Chief Financial Officer

Matt Carletti — Analyst

Mark Jones — Chief Financial Officer

Brian Meredith — Analyst

Tommy McJoynt-Griffith — Analyst

Tommy McJoynt — Analyst

Michael Zaremski — Analyst

Mark Hughes — Analyst

Andrew Kligerman — Analyst

Pablo Singzon — JPMorgan Chase and Company — Analyst

Scott Heleniak — RBC Capital Markets — Analyst

Katie Sakys — Autonomous Research — Analyst

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