We continue to see a consistent pattern in net operating ratios in relation to increasing revenue levels: as revenues increase, net operating ratios tend to decline overall, providing further evidence that increasing revenue levels may be associated with increased operating costs or other factors that decrease the percentage of revenues that are retained as revenue.
In the $300-$550 and $800-$1.5 ranges, the decline in COS indicates increased rainmaker production in Q1, contributing to improved profitability in these ranges. In all other ranges, the COS is increasing, suggesting increased agent adoption as a continued growth strategy.
For companies with $3 million in annual revenue, there were as many financial datasets analyzed in Q1 as in Q4 2023, suggesting consistency and long-term sustainability for these established businesses.
For companies generating more than $3 million in annual revenue, there was little fluctuation across categories, with net income increasing by just 0.9%, further supporting the conclusion that these companies have established solid foundational practices that lead to consistency and stability despite an ever-changing marketplace.
For companies with annual revenues under $800,000, salary increases suggest investment in talent for future growth, while companies with annual revenues over $800,000 may see slight salary decreases, suggesting quarterly revenue growth and stable talent.
Companies with annual revenues between $550,000 and $800,000 saw a significant decline in profitability due to increases in COS, salaries, lead generation, and variable costs, while those in the $800,000 to $1.5 million range saw a significant increase in profitability due to a general decline in the same categories.
At either end of the revenue range, we see only minor fluctuations in overall operating expense percentages, suggesting quarter-to-quarter adaptability with active adjustments to increase or decrease various areas to ensure continued profitability.
Overall, there has been little fluctuation in lead generation rates, remaining stable at around 9.5% for most categories, suggesting an effective marketing strategy that can be appropriately adjusted to accommodate seasonal fluctuations in revenue.
Streamlined, RTC Consulting, and HWMedia have teamed up to share this data with our readers to provide greater transparency into the results of over 200 teams. These results are published quarterly, approximately 45 days after the end of each calendar quarter.
David Pittilio is CEO of Streamlined. Business solutions.
