Goosehead Insurance : GSHD ICR Conference Investor Presentation

ICR Conference January 2020

Disclaimer

This presentation may contain forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. All statements other than statements of historical facts contained in this presentation, including information concerning our possible or assumed future results of operations and expenses, business strategies and plans, competitive position, business and industry environment and potential growth opportunities, are forward-looking statements. Forward- looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on any forward- looking statements in this presentation. Except as required by law, we disclaim any obligation to update any forward-looking statements for any reason after the date of this presentation, or to update the reasons why actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.

Further information on potential factors that could affect the financial results of Goosehead Insurance is included in our annual report on Form 10-K for the most recent fiscal year and in our quarterly report on Form 10-Q for the most recent fiscal quarter. These documents and others containing important disclosures are available on the SEC Filings section of the Investor Information section of our Web site.

This presentation is strictly confidential, is for informational purposes only and may not be relied upon in connection with the purchase or sale of any security. You may not disclose any of the information contained herein to any other parties without our prior express written permission.

This presentation shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

1

Company Overview

Rapid and Responsible Organic Growth

New Business and Renewal Premium Growth

Corporate and Franchise Channel Premium Growth

	$600
	$500
($mm)			($mm)
volume	$400		volume
	5 Year CAGR: 45%
Premium	$300	Premium
10 Year CAGR: 35%
	$200
	$100

$-
2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018
													New		Renewal

1 5 and 10 year CAGR calculations through 12/31/2018

$600

$500

$400

CAGR Since 2016

$300Corporate: 29%

Franchise: 58%

$200

$100

$- 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

	Corporate Channel		Franchise Channel

3

Redefining the Industry

Personal lines property and casualty insurance broker

Considerably differentiated business model serving the American consumer producing strong, sustained growth and profitability

7 corporate sales offices in Texas and Illinois; 828 franchise locations1 primarily in CA, TX, FL and IL

Well-established and positioned for sustained levels of strong growth and profitability

Total revenue ($mm)

Accelerating Growth Trajectory	Focused on Personal Lines
									Other
									3%
		63.7
		60.1
42.7	45.4
						Automotive	Homeowners
31.5								44%	54%

TTM Sep19 Total premiums: $678mm

2016

2017 2

2018

YTD 2018

YTD 2019

1 Number of franchise locations include 245 franchises which are under contract but yet to be opened as of 9/30/2019; 2 Excludes gain on sale of $3.5mm

4

Personal Insurance Market Large and Highly Fragmented

Industry historically has struggled to find the right way to best serve the needs of customers

			Independent		Captive Agencies		Carriers Direct To
			Agencies		Owned By Carriers		Customer
		Offers products from multiple	Largely very small businesses		Largely very small businesses
	Key	carriers with the support of a			One carrier which sells
	which sell products from		which sell products from only
	Attributes	best-in-class service			products directly to clients
	multiple carriers		one carrier
		organization
	Product
	Choice

Service

Quality

							$151
	$496mm1	$114
2017 U.S.							70%
		62%
Premiums	45%	55%				$60
							89%
			38%				30%
							11%
						Home		Auto

Source: Independent Insurance Agents & Brokers of America

1 Represents 2018 premiums excluding commercial and excess liability premiums.

5

Management Strongly Aligned with Shareholders

Deeply committed to long-term success

% Ownership as of September 30, 2019

8%

57%35%

Other management

Public Shareholders

Mark Jones and family

6

Delivery of Operations

Compelling Business Model

Corporate Channel		Service Team
	Handle cases from cradle to grave
 Agents typically recruited		Revenue generation focus
directly out of college		All fully licensed agents
 Display a high aptitude for
learning new skills
	Corporate Team
 Motivated by professional
	Training, marketing and support
and financial incentives
		Risk management and processing
		Carrier management

Franchise Channel

• High performing agents on their current platform
• Entrepreneurially focused
• Motivated by professional and financial incentives

8

Highly Developed Recruiting Strategy Supports Sustainable Outsized Growth

Corporate Channel		Franchise Channel

Recruiting Strategy

• New college graduates with entrepreneurial spirit
• Driven by professional development and financial reward based on personal performance
• Well defined target school list with strong on campus relationships and strong sponsorship

• Highly effective producers who are seeking autonomy
• Entrepreneurially motivated to continue to build their own business
• Target professionals from captive agencies and other independent agencies

Growth

Opportunities

• Continue to deploy highly refined recruiting and training process for new agents
• Expand geographically through recruiting at additional college campuses

• Continue to recruit and train top producers who desire autonomy from captive agencies and other independent agencies
• Approximately 75,000 potential franchise candidates in the current pipeline

	Average age: 27 vs.								Average age: 42 vs.
	industry average 54					232		industry average 54			828
				174								646		245 *
			167
													556
													189 *
													132*
		111										411
Number of	69											119 *			583
Agents and
												457	424
Franchisees
											292
										190
	2016	2017	2018	Q3 2018	Q3 2019	2016	2017	2018	Q3 2018	Q3 2019

* Franchises signed but yet to open as of the end of the indicated period

9

Robust and Innovative Technology Platform

Supports High Growth Business Model

"Goosehead Insurance leverages Salesforce technology to transform how it serves it partners and customers. Creating innovative applications that bring greater intelligence and value to their industry, Goosehead is a disruptor we are proud to support."

	Michael Khoury, Vice President - Financial Services, Salesforce.com
Goosehead Systems		Typical Agency Systems
Agent Recruiting & Onboarding
		AMS 360		TAM
		SAGITTA		EPIC
Marketing & Client Acquisition

Quoting & Sales Management

Omnichannel Client Service

VS.Internal mainframe

Carrier Management & Training

Advanced Analytics & AI

Entire business cycle managed		"Hodge-podge" of legacy systems
in the	cloud		which lack continuity

10

Constantly Innovating to Remain a Step Ahead

Enhancing Tech Platform to Optimize Efficiency and Effectiveness

1

Application

Development and

Investment

Comparative Rater

• Consolidate data entry into one interface
• Eliminates 75% of required input fields
• Saves agents approximately 15 minutes per quote

Cloud-based Voice

Solution

• Unified communications platform
• Mobile capabilities (text, live chat)
• Omnichannel client engagement capabilities

2

Leveraging

Big Data

Nationwide Property

Database

• Provides info for every U.S. county on age of home, construction type, square footage, roof type, etc.
• Allows for far more efficient and accurate quoting

Proprietary Mortgage

Database

• Provides U.S. mortgage activity data down to micro-targeted level
• Agents market services with sophistication and precision

Strengthening Barriers to Entry

11

Industry-Leading New Business Production

For New and Seasoned Agents

Compelling and proven sales focused model has resulted in industry-leading production

New business per agent by tenure ($000s)

$137

3.4x

$88

$67	1.7x

$49

$40

Corporate Channel		Franchise Channel	Industry Best 1
					Practice
		< 3 Years		3+ Years

1 Represents industry best practice per Reagan Consulting; most industry agents have tenures significantly longer than 2 to 3 years

12

Technology Drives Margins While

Simultaneously Ensuring Client Satisfaction

Technology enables Company to deliver service highly efficiently

2018 Service payroll

as a % of gross personal lines commissions

3.8x	1
27.4%

7.3%

2018 Industry Service

Best Practice

Key service center metrics

Net Promoter Score

90

Client hold times

< 60 Seconds

New business generation

Cross-sell / Upsell

In addition, we also carefully monitor call abandonment rate, call back rate and speed of answer

Service agent compensation

2018 compensation: $46k

1 Indicates, per Reagan Consulting industry best practice service compensation as a percentage of personal lines revenue for agencies with revenues of greater than $25M

13

Best-In-Class Customer Service Drives High

Revenue Retention

Net Promoter Scores (NPS) above several of the most respected brands in the U.S.1 has resulted in stable and recurring revenue with a customer retention rate of 88% in Q3 2019

100

90	2
90	2.4X

80

70

60

50

40

30

20

10

0

Industry Average 3

Source: External NPS data from Satmetrix; 1 Ritz, USAA, Apple, Amazon; 2 Represents Q3 2019 NPS; 3 Represents average of auto industry and home industry

14

Meaningful Growth Opportunity

Continued Technology	Continued Corporate
Upgrades	Channel Recruiting

	Pre-2018 Territories
	New Territories in 2018
	New Territories Targeted in 2019
Continued
Improvements in	National Rollout of
Productivity and	Franchise Channel
Customer Service

15

Continued Corporate Channel Recruiting

After working for more than three years, the typical Goosehead

corporate agent earns more than $150k annually

• Goosehead has a highly developed process for recruiting new agents which we have continually refined over the last 10+ years. Additional college campuses to be added
• The ongoing enhancements to our recruiting and training processes has resulted in higher success rates for our corporate agents

Average corporate agent compensation by tenure ($000s)

$154

$67

$47

2018

< 2 years		2 - 3 years		>3 years

16

National Rollout Of Franchise Channel

Pipeline Growth

Other

31,000

MI 3,000

PA 4,000

NC 4,000

FL 4,000

IL7,000

CA11,000

TX11,000

Production Ramp-up	National Implications
$59	11.6%
	34%
$44	Growth

Total Leads as of Sep 2019: 75,000

• ~43 members on the recruiting team as of Q3 19
• Recruiting targets include the universe of nearly 400,000 U.S. insurance agents

1 Source: 2018 Home Mortgage Disclosure Act Data

20172018

• Through a combination of both refining the Franchise criteria and training, Goosehead significantly lifted productivity for Franchises

Non-Texas New Business per agency, >1 year ($000s)

Market share of homeowners insurance in new mortgage originations / refinancings in Texas

2018 TX mortgage originations /

refinancing: ~459k1

11.6%	7.7mm
Goosehead	Originations
market	/ refinancing
share	in the U.S.1

893k Potential new clients each year

17

Revenue Break-Down

Only 20% of total revenue is exposed to housing market conditions

	TTM 9/30/2019 Revenue
	80	$78.4MM			$23.5MM
	70	New Business	1		Client Referral
		30%			32%
	60
	50	Contingent Commissions
	11%
$MM		Initial Franchise Fees
40	8%
	30
		2
	20	Renewals			Referral Partner
	50%			68%
	10
	-

1. Includes TTM New Business Revenue (Corporate), Agency Fees, and New Business Royalty Fees
2. Includes TTM Renewal Revenue (Corporate) and Renewal Royalty Fees

25

20

15

10

5

-

$MM

18

Economics of our

Business

Strong Revenue Growth and Stable Margins

Total revenue ($mm)

$60.1

$42.7

$31.5

20162017 32018

Adj. EBITDA Margin4	25.8%			25.1%			24.5%
		Renewal revenue 1		New business revenue 1		Initial franchise fees 2		Contingent commissions		Other income

1 Includes royalty fees; 2 Related to the training and onboarding of new franchise locations; 3 Excludes gain on sale of $3.5mm 4 See Appendix for GAAP reconciliation

20

Outpacing the Industry in Growth with a Clear

Path to Margin Expansion

2018 Organic revenue growth

2018 Adjusted EBITDA margins

41%

25%

25%

4%

Public Brokerage	1	Public Brokerage
Average		Average

Source: Public filings; 1 Represents 2018 Adjusted EBITDA margin; see Appendix for GAAP reconciliation.

Note: Public comparables include AON, AJG, BRO, MMC and WLTW; represent North American retail insurance brokerage organic growth or closest approximation

21

Compelling Economics Drive Growth And Visibility

Allowing agents to focus solely on selling creates a clear path to

continued organic growth and revenue visibility

Corporate Channel Revenue

			$265
		$188	$100
		$100	88%
$100		retention1
	88%		$165
$100	$88
retention1

Year 1	Year 2		Year 3
	New business commissions			Renewal commissions

Franchise Channel Revenue

Revenue increases

$103

even if no new$39 business is written

	$64
	$44	$44
$20	Mechanical	Mechanical
	increase	increase
$20	$20	$20
Year 1	Year 2	Year 3
New business royalty	Renewal royalty
20% royalty		50% royalty

Note: Illustrative example

1 Represents Q3 2019 client retention rate

22

Mechanical Growth Provides Abundant and

Predictable Organic Opportunity

New franchise units take several years to

materially impact revenue

	18			$17.0M
	16			5%
			13%
	14
($MM)	12		5%	22%
Revenue			$11.1M
10
			21%
Royalty	8		$6.9M
6		9%
				59%
	4	$3.5M	74%
			91%

2100%

-
2015		2016	2017			2018
YOY Franchise Unit Growth	52%	54%			57%
Cohorts' contribution to annual revenue			2015 and prior		2016		2017			2018

Young tenure of franchises provides large volumes of predictable future revenue

		Franchise
	Channel Tenure
		Profile	# of
				franchises
800		> 4		77
		years
700		3 - 4 years		45
	2 - 3		80
		years
600
		1 - 2
		1 - 2 years		152
		years
500
400
300				4742
	0 - 1
		(57%)
		0 - 1 year
200		year

100

-

Number of Franchises

1 Number of franchise locations include 245 franchises which are under contract but yet to be opened as of 9/30/2019

23

Margins Increase Mechanically as New

Business Becomes Renewal Business

New and renewal business costs

	New	Renewal
	Business	Business
Commissions to agents / franchisees	●	◑	 >50% lower for renewal business
(net revenue)
	●	◑	 Critical to both new and renewal
Client service salaries and bonuses	business; burden heaviest for new
			clients
Quality control salaries and bonuses	●	○	 Not relevant for renewal business
Training salaries	●	○	 Not relevant for renewal business
Client development costs	●	○	 Not relevant for renewal business
Franchise support	●	○	 Not relevant for renewal business

Opportunities to further expand margins through operating leverage

created by revenue growth growth

24

Investment Highlights

Disruptive model positioned to substantially grow in a massive and fragmented industry

Outpaced revenue growth driven by strategically solving industry challenges

Comprehensive value proposition for clients, agents and carriers

Highly developed recruiting strategy with experienced evaluators of talent

Robust and innovative technology platform supports high growth business model

Committed and capable management team with ambitions of industry leadership

Recurring revenue with strong future visibility and expanding long-term margins

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Appendix

Executive biographies

Mark E. Jones		Michael Colby

Co-Founder, Chairman and Chief

Executive Officer

Mr. Jones is a co-founder of the company and has served as Chief Executive Officer since inception in 2003. Under his leadership, Goosehead has grown to be counted among the largest and fastest growing personal lines insurance agencies in the country. Prior to joining the company, he was a Senior Partner and Director of Bain & Company, the global management consulting firm. Earlier in his career, he worked in the audit and mergers and acquisitions practice groups for Ernst & Young. He holds a Bachelor of Commerce degree from the University of Alberta and an MBA from Harvard Business School

President and Chief Operating Officer

Mr. Colby joined Goosehead Insurance in 2006, was promoted to Senior Vice President and Chief Financial Officer, and served in that role from 2010 to

2014. He was appointed Executive Vice President and Chief Operating Officer in 2011 and then promoted to President and COO in 2016. Mr. Colby has led the franchise operations of the company since 2011, leading Goosehead's exponential growth and expansion into several states. Earlier in his career, Mr. Colby worked with KPMG in their audit practice. He holds a B.B.A in Accounting and an M.S. in Finance from Texas A&M University

Mark Colby		Ryan Langston

Chief Financial Officer

Mr. Colby has served as Chief Financial Officer since 2016. Mr. Colby joined Goosehead in 2012 as Manager of Strategic Initiatives, where he worked on Information Systems platform development and migration, real estate planning, and business diversification initiatives. Since his promotion to Vice President of Finance in 2015, Mr. Colby has overseen Goosehead's internal and external financial reporting, budgeting and forecasting, payroll/401(k) administration, treasury function, and Quality Control/Risk Management department. Prior to

joining Goosehead full-time, Mr. Colby worked in Ernst & Young's Transaction

Advisory Services and Audit service lines from 2009 to 2012. He graduated cum laude from Texas A&M University in 2009 with a B.B.A. in Accounting and a M.S. in Finance and is a Certified Public Accountant

General Counsel

Mr. Langston joined Goosehead Insurance in 2014 as Vice President and General Counsel. He is responsible for coordinating and leading legal activity and compliance. Prior to joining Goosehead, Mr. Langston was an attorney with Strasburger & Price, LLP where he represented businesses in commercial litigation and arbitration involving business dissolutions, theft of trade secrets, enforcement of noncompetition agreements, and breach of contracts. He holds a Bachelor of Arts degree from Brigham Young University and received his J.D. from the University of Texas School of Law

27

Executive biographies (cont'd)

Michael Moxley		Megan Bailey

Vice President

Mr. Moxley serves as Vice President of Service Delivery for Goosehead Insurance. He joined the company from Transcom Global, an international BPO company, where he was Director of Service Delivery for North America, having oversight for a service operations team spanning four service centers and two countries. Prior to Transcom, Mr. Moxley worked with Alorica, another global BPO firm, where he was a key contributor to their expansion strategy, growing operations to over 3,000 agents in five centers. Earlier in his career Mr. Moxley spent more than 10 years leading various sales and service teams for AT&T. Mr. Moxley has over 13 years of experience in scaling service operations and driving client satisfaction

Vice President

Ms. Bailey serves as Vice President of Franchise Sales for Goosehead Insurance. She joined Goosehead in 2011 to launch the franchise division of the firm. Goosehead has since grown to over 400 franchise locations in six years. She has over 15 years of sales and management experience including retail, advertising, and software. Originally from Cedar Rapids, Iowa, Megan graduated from the University of Iowa with a Bachelor's degree in Business Communications

Matthew Colby		Gary Delavan

Vice President

Mr. Colby is a Co-Founder of Goosehead Insurance's Houston Office and currently serves as Vice President of Agency Sales. He began his professional career at Charles Schwab as a 401(k) Associate in their Plan Conversions Department. He joined Goosehead Insurance Dallas as an Account Executive in 2007, and was promoted to Manager in 2008. In 2009, Mr. Colby moved to Houston to open Goosehead's first satellite office. Prior to working at Goosehead, Mr. Colby obtained a Bachelor of Science at Texas A&M University where he majored in Political Science with a minor in Business Administration

Vice President

Mr. Delavan joined Goosehead Insurance as an Account Executive in 2005, became a Sales Manager in 2007, was promoted to Partner and Director in 2010, and now serves as Vice President of Corporate Sales. As Vice President of Corporate Sales, Mr. Delavan leads the strategic growth and development of the company's high-octane Corporate Sales teams located in Irving, Fort Worth, Houston, Austin and Chicago. In his 12 years at Goosehead, Mr. Delavan has been involved in many aspects of the business, including recruiting top talent, training & development of that talent, geographic expansion and supporting Goosehead's network of franchise owners. As a third generation Longhorn, Mr. Delavan attended the University of Texas where he graduated Cum Laude with a Major in Finance and minor in Accounting

28

Executive biographies (cont'd)

Drew Burks

Chief Information Officer

Mr. Burks joined Goosehead Insurance in 2006 serving in both risk management and technology roles. In 2013 he was promoted to Director of Risk Management, transitioned to Director of Information Systems in 2015, and now serves as Chief Information Officer. Mr. Burks is a Salesforce Certified Administrator and has led Goosehead's development of this platform since its implementation in 2009. He also holds DocuSign for Salesforce and Dell Boomi Integration Developer I certifications. Mr. Burks graduated from Baylor University in 2003 with a B.B.A. in Management Information Systems.

29

Investments In People Will Result In Long-Term

Growth And Margin Expansion

Making significant investments today to ensure growth and profitability is sustainable for

years to come

Channel

Agent Head Count	Agent New Business Productivity	Agent Compensation	Other Costs
	213
167			Client Service

Corporate

	$146	$146
	111
69	$86

2016

2017

2018

Q2 2019

Corporate Channel

Training, quality

control, client development

New business	Renewal	New business	Renewal
commissions	commissions	commissions	commissions

< 2 years 2 - 3 years > 3 years

Franchises Operating

Franchise New Business Productivity

Franchise Compensation

Other Costs

Franchise Channel

535 1

	457
	$68	$64
292	$44
190

2016 2017 2018 Q2 2019Franchise Channel

< 2 years		2- 3 years		> 3 years

80%
	50%
New business	Renewal
commissions	commissions

Client Service

Training, quality

control, client development, franchise support

New business	Renewal
commissions	commissions

1 Excludes all new signings and franchises in implementation

30

Non-GAAP Adjusted EBITDA Reconciliation

		2016		2017		2018
Net Income	$	4.7	$	8.7	$	(18.7)
Other (Income) Expense		-		(3.5)		0.2
Interest Expense		0.4		2.5		4.3
Depreciation and Amortization		0.5		0.9		1.5
Equity Compensation		2.7		2.2		27.1
Income Tax Expense		-		-		0.4
Adjusted EBITDA	$	8.1	$	10.7	$	14.8
Adjusted EBITDA Margin		25.8%		25.1%		24.5%

Note: Financials represent Goosehead Financial, LLC and Subsidiaries and Affiliates. May not sum to total due to rounding.

31