Goosehead Insurance, Inc. (GSHD) 2025 Annual Report Summary
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 2025. Goosehead Insurance, Inc. is a rapidly growing independent insurance agency operating a hybrid model of corporate-owned offices and franchise locations. The company distributes personal lines insurance (home, auto, umbrella, etc.) through a proprietary technology platform and a network of over 2,600 licensed agents. As of December 31, 2025, the company operated 1,009 franchises and 13 corporate sales offices across 43 states.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Revenue | $365.3 million | $314.5 million | +16% |
| Core Revenue (Non-GAAP) | $317.9 million | $273.7 million | +16% |
| Net Income | $44.5 million | $49.1 million | -9.4% |
| Adjusted EBITDA (Non-GAAP) | $113.6 million | $99.9 million | +14% |
| Basic EPS | $1.11 | $1.23 | -9.8% |
| Adjusted EPS (Non-GAAP) | $1.86 | $1.99 | -6.5% |
| Total Written Premium | $4.4 billion | $3.8 billion | +17% |
| Operating Cash Flow | $91.8 million | $71.5 million | +28% |
| Debt Outstanding | $298.5 million | $93.1 million | +221% |
| Cash & Equivalents | $37.9 million | $58.0 million | -35% |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 16% driven by a 17% increase in Total Written Premium. Renewal Royalty Fees grew 23% to $170.8 million, reflecting strong client retention (85%) and premium rate increases.
- Profitability Pressure: Net income decreased by $4.7 million despite revenue growth. This was primarily due to a 224% increase in interest expense ($23.8 million vs. $7.3 million) resulting from a new $300 million term loan refinancing, and a 14% increase in employee compensation costs.
- Debt Refinancing: In January 2025, the company entered a new Credit Agreement with a $300 million term loan and $75 million revolving facility, replacing the prior $100 million term loan. This significantly increased leverage and interest obligations.
- Shareholder Returns: The company paid a one-time special cash dividend of $5.91 per share ($146 million total) in January 2025 and repurchased $81.7 million of Class A common stock during the year.
- Franchise Count: Operating franchises decreased 9% to 1,009, attributed to lower franchise turnover and a strategic focus on quality over quantity, while franchise agent count grew 1%.
Outlook, Risks, and Management Commentary
- Management Commentary: Management highlights the shift from new business to renewal business as a key margin driver, noting that renewal royalty fees are 150% higher than new business fees. The company emphasizes its "Digital Agent" platform and high Net Promoter Score (NPS) of 77 (down from 89 in 2024 but still 3.5x the industry average) as competitive advantages.
- Guidance: The filing does not provide specific numerical guidance for 2026. Management expects continued growth in Total Written Premium and Core Revenue, driven by agent productivity and retention.
- Key Risks:
- Interest Rate Sensitivity: Variable rate debt exposes the company to rising interest rates, which could further increase debt service costs.
- Carrier Concentration: Two carriers represented 19% and 13% of total revenue in 2025. Loss of these relationships could materially impact results.
- Regulatory & Legal: Risks include changes in insurance regulations, contingent commission scrutiny, and potential litigation regarding franchise relationships or corporate governance.
- Cybersecurity: The company relies heavily on proprietary technology; a significant breach could damage reputation and operations.
- Unusual Items: The company recognized $4.0 million in renewal revenue due to the release of constraints on variable consideration from prior periods. Additionally, $4.7 million in impairment charges were recorded related to office lease exits.
Investor Verification Checklist
- Debt Service Coverage: Verify the company's ability to service the new $298.5 million debt load given the 224% increase in interest expense and the impact on future free cash flow.
- Franchise Turnover Quality: Investigate the reasons for the 9% decrease in franchise count and whether this indicates underlying franchisee dissatisfaction or a strategic consolidation.
- Carrier Concentration: Assess the stability of relationships with the top two carriers (19% and 13% of revenue) and the risk of commission rate reductions.
- Contingent Commission Volatility: Review the predictability of contingent commissions, which grew 22% to $38.4 million but are subject to carrier underwriting results and catastrophic events.
- Tax Receivable Agreement: Confirm the impact of the $171.9 million liability under the tax receivable agreement on future liquidity and cash distributions to shareholders.