Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 04, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38466 | |
Entity Registrant Name | GOOSEHEAD INSURANCE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-3886022 | |
Entity Address, Address Line One | 1500 Solana Blvd, Building 4, Suite 4500 | |
Entity Address, City or Town | Westlake | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 76262 | |
City Area Code | 469 | |
Local Phone Number | 480-3669 | |
Title of 12(b) Security | Class A Common Stock, par value $.01 per share | |
Trading Symbol | GSHD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001726978 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 16,071,601 | |
Class B Common Stock | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 20,244,135 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | [1] | Mar. 31, 2019 | [2] | |
Revenues: | ||||
Revenues | $ 20,425,000 | $ 23,133,000 | ||
Operating Expenses: | ||||
Employee compensation and benefits | 13,503,000 | 9,191,000 | ||
General and administrative expenses | 5,872,000 | 4,430,000 | ||
Bad debts | 309,000 | 401,000 | ||
Depreciation and amortization | 540,000 | 423,000 | ||
Total operating expenses | 20,224,000 | 14,445,000 | ||
Income from operations | 201,000 | 8,688,000 | ||
Other Income (Expense): | ||||
Other income | 66,000 | 0 | ||
Interest expense | (604,000) | (626,000) | ||
Income (loss) before taxes | (337,000) | 8,062,000 | ||
Tax expense (benefit) | (41,000) | 744,000 | ||
Net income (loss) | (296,000) | 7,318,000 | ||
Less: net income (loss) attributable to non-controlling interests | (140,000) | 4,846,000 | ||
Net income (loss) attributable to Goosehead Insurance, Inc. | $ (156,000) | $ 2,472,000 | ||
Earnings (loss) per share: | ||||
Basic (in dollars per share) | $ (0.01) | $ 0.17 | ||
Diluted (in dollars per share) | $ (0.01) | $ 0.16 | ||
Weighted average shares of Class A common stock outstanding | ||||
Basic (in shares) | 15,564 | 14,211 | ||
Diluted (in shares) | 15,564 | 15,289 | ||
Dividends declared per share (in dollars per share) | $ 0 | $ 0.41 | ||
Commissions and agency fees | ||||
Revenues: | ||||
Revenues | $ 11,811,000 | $ 16,170,000 | ||
Franchise revenues | ||||
Revenues: | ||||
Revenues | 8,445,000 | 6,828,000 | ||
Interest income | ||||
Revenues: | ||||
Revenues | $ 169,000 | $ 135,000 | ||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 10,831 | $ 14,337 |
Restricted cash | 1,119 | 923 |
Commissions and agency fees receivable, net | 4,655 | 6,884 |
Receivable from franchisees, net | 2,859 | 2,602 |
Prepaid expenses | 5,755 | 1,987 |
Total current assets | 25,219 | 26,733 |
Receivable from franchisees, net of current portion | 11,477 | 11,014 |
Property and equipment, net of accumulated depreciation | 9,999 | 9,542 |
Intangible assets, net of accumulated amortization | 475 | 445 |
Deferred income taxes, net | 26,900 | 15,537 |
Other assets | 1,818 | 1,357 |
Total assets | 75,888 | 64,628 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 4,515 | 5,033 |
Premiums payable | 1,119 | 923 |
Deferred rent | 703 | 683 |
Contract liabilities | 3,006 | 2,771 |
Note payable | 2,000 | 4,000 |
Total current liabilities | 11,343 | 13,410 |
Deferred rent, net of current portion | 6,732 | 6,681 |
Note payable, net of current portion | 44,383 | 42,161 |
Contract liabilities, net of current portion | 21,079 | 20,024 |
Liabilities under tax receivable agreement, net of current portion | 22,339 | 13,359 |
Total liabilities | 105,876 | 95,635 |
Commitments and contingencies (see note 7) | ||
Additional paid in capital | 15,891 | 14,442 |
Accumulated deficit | (23,967) | (23,811) |
Total stockholders' equity | (7,714) | (9,007) |
Non-controlling interests | (22,274) | (22,000) |
Total equity | (29,988) | (31,007) |
Total liabilities and equity | 75,888 | 64,628 |
Class A Common Stock | ||
Current Liabilities: | ||
Common stock | 160 | 152 |
Class B Common Stock | ||
Current Liabilities: | ||
Common stock | $ 202 | $ 210 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) Parenthetical - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Class A Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock shares issued (in shares) | 16,032,000 | 15,238,000 |
Common stock shares outstanding (in shares) | 16,032,000 | 15,238,000 |
Class B Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock shares issued (in shares) | 20,264,000 | 21,055,000 |
Common stock shares outstanding (in shares) | 20,264,000 | 21,055,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common stockClass A Common Stock | Common stockClass B Common Stock | Additional paid in capital | Accumulated deficit | Total stockholders' equity | Non-controlling interest | |
Beginning balance at Dec. 31, 2018 | $ (25,203) | $ 138 | $ 224 | $ 11,899 | $ (20,761) | $ (8,500) | $ (16,703) | |
Beginning balance (in shares) at Dec. 31, 2018 | 13,799 | 22,486 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Distributions | (245) | (245) | ||||||
Net income (loss) | 7,318 | [1] | 2,472 | 2,472 | 4,846 | |||
Dividends declared | (15,000) | (5,962) | (5,962) | (9,038) | ||||
Equity-based compensation | 368 | 368 | 368 | |||||
Activity under employee stock purchase plan | 0 | |||||||
Redemption of LLC Units | 0 | $ 7 | $ (7) | (679) | (679) | 679 | ||
Redemption of LLC Units (in shares) | 723 | (723) | ||||||
Deferred tax adjustments related to Tax Receivable Agreement | 911 | 911 | 911 | |||||
Ending balance at Mar. 31, 2019 | (31,851) | $ 145 | $ 217 | 12,499 | (24,251) | (11,390) | (20,461) | |
Ending balance (in shares) at Mar. 31, 2019 | 14,522 | 21,763 | ||||||
Beginning balance at Dec. 31, 2019 | (31,007) | $ 152 | $ 210 | 14,442 | (23,811) | (9,007) | (22,000) | |
Beginning balance (in shares) at Dec. 31, 2019 | 15,238 | 21,055 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Distributions | (1,003) | (1,003) | ||||||
Net income (loss) | (296) | [2] | (156) | (156) | (140) | |||
Equity-based compensation | 498 | 498 | 498 | |||||
Activity under employee stock purchase plan | 116 | $ 0 | 116 | 116 | ||||
Activity under employee stock purchase plan (in shares) | 3 | |||||||
Redemption of LLC Units | $ 0 | $ 8 | $ (8) | (869) | (869) | 869 | ||
Redemption of LLC Units (in shares) | 791 | 791 | 791 | |||||
Deferred tax adjustments related to Tax Receivable Agreement | $ 1,704 | 1,704 | 1,704 | |||||
Ending balance at Mar. 31, 2020 | $ (29,988) | $ 160 | $ 202 | $ 15,891 | $ (23,967) | $ (7,714) | $ (22,274) | |
Ending balance (in shares) at Mar. 31, 2020 | 16,032 | 20,264 | ||||||
[1] | The three months ended March 31, 2019 are reported under ASC 605 | |||||||
[2] | The three months ended March 31, 2020 are reported under ASC 606 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | |||
Cash flows from operating activities: | ||||
Net income (loss) | $ (296,000) | [1] | $ 7,318,000 | [2] |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 747,000 | 476,000 | ||
Bad debt expense | 309,000 | [1] | 401,000 | [2] |
Equity-based compensation | 498,000 | 368,000 | ||
Impacts of Tax Receivable Agreement | 9,659,000 | 5,161,000 | ||
Deferred income taxes | (9,659,000) | (5,081,000) | ||
Changes in operating assets and liabilities: | ||||
Dividends held by transfer agent | 0 | (5,962,000) | ||
Receivable from franchisees | (809,000) | (565,000) | ||
Commissions and agency fees receivable | 2,001,000 | (553,000) | ||
Prepaid expenses | (3,768,000) | (167,000) | ||
Other assets | (461,000) | 0 | ||
Accounts payable and accrued expenses | (1,244,000) | (356,000) | ||
Deferred rent | 71,000 | 985,000 | ||
Contract liabilities | 1,290,000 | 0 | ||
Premiums payable | 196,000 | (24,000) | ||
Unearned revenue | 0 | (199,000) | ||
Payments pursuant to the tax receivable agreement | (9,000) | 0 | ||
Net cash provided by (used for) operating activities | (1,475,000) | 1,802,000 | ||
Cash flows from investing activities: | ||||
Proceeds from notes receivable | 9,000 | 5,000 | ||
Purchase of software | (60,000) | (55,000) | ||
Purchase of property and equipment | (967,000) | (1,249,000) | ||
Net cash used for investing activities | (1,018,000) | (1,299,000) | ||
Cash flows from financing activities: | ||||
Debt issuance costs | (530,000) | 0 | ||
Repayment of note payable | (26,321,000) | (500,000) | ||
Proceeds from notes payable | 26,921,000 | 0 | ||
Proceeds from the issuance of Class A common stock | 116,000 | 0 | ||
Member distributions and dividends | (1,003,000) | (245,000) | ||
Net cash used for financing activities | (817,000) | (745,000) | ||
Net decrease in cash and restricted cash | (3,310,000) | (242,000) | ||
Cash and cash equivalents, and restricted cash, beginning of period | 15,260,000 | 19,011,000 | ||
Cash and cash equivalents, and restricted cash, end of period | 11,950,000 | 18,769,000 | ||
Supplemental disclosures of cash flow data: | ||||
Cash paid during the year for interest | 326,000 | 626,000 | ||
Cash paid for income taxes | $ 0 | $ 0 | ||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization On May 1, 2018 Goosehead Insurance, Inc. ("GSHD") completed an initial public offering (the “Offering”) of 9,810 thousand shares of Class A common stock at a price of $10.00 per share, which included 1,280 thousand shares issued pursuant to the underwriter's over-allotment option. Following completion of the Offering, GSHD owned 37.3% of Goosehead Financial, LLC (“GF”) and the Pre-IPO LLC Members owned the remaining 62.7%. GSHD is the sole managing member of GF and, although GSHD holds a minority economic interest in GF, GSHD has the sole voting power and control of management of GF. Accordingly, GSHD consolidates the financial results of GF and reports non-controlling interest in GSHD's consolidated financial statements. GF was organized on January 1, 2016 as a Delaware Limited Liability Company and is headquartered in Westlake, TX. GSHD (collectively with its consolidated subsidiaries, the “Company”) provides personal and commercial property and casualty insurance brokerage services for its clients through a network of corporate-owned agencies and franchise units across the nation. The Company had seven corporate-owned locations in operation at March 31, 2020 and 2019. Franchisees are provided access to insurance Carrier Appointments, product training, technology infrastructure, client service centers and back office services. During the three months ended March 31, 2020 and 2019, the Company onboarded 84 and 63 franchise locations, respectively and had 679 and 501 operating franchise locations as of March 31, 2020 and 2019, respectively. No franchises were purchased by the Company during the three months ended March 31, 2020 or 2019. All intercompany accounts and transactions have been eliminated in consolidation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the annual disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial positions at March 31, 2020, the condensed consolidated results of operations, stockholders' equity and statements of cash flows for the three months ended March 31, 2020 and 2019. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its revenue. Revenue is expected to be higher during the Company’s fourth quarter primarily due to the timing of contingent commission revenue recognition. Impact of the coronavirus (“COVID-19”) pandemic The extent to which the COVID-19 pandemic and the related economic impact may affect our financial condition or results of operations is uncertain. The extent of the impact on our operational and financial performance will depend on various factors, including the duration and spread of the outbreak and its impact on home sales and consumer spending. To date, the pandemic has not increased our costs of or access to capital under our term note and revolving credit facility and we do not believe it is reasonably likely to in the future. In addition, we do not believe that the pandemic will affect our ongoing ability to meet the covenants in our debt instruments, including under our term note and revolving credit facility. To date, the pandemic has not impacted the collectibility of receivables or adversely affected our revenue. Due to the nature of our business, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. We are not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained, any such changes will be recognized in the consolidated financial statements. Accordingly, actual results could differ from those estimates as more information becomes known. Income Taxes The Company accounts for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. Restricted Cash The Company holds premiums received from the insured, but not yet remitted to the insurance Carrier in a fiduciary capacity. Premiums received but not yet remitted included in restricted cash were $1,119 thousand and$352 thousand as of March 31, 2020 and 2019, respectively. The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statement of cash flows for the three months ended March 31, 2020 and 2019 (in thousands) : March 31, 2020 2019 Cash and cash equivalents $ 10,831 $ 18,417 Restricted cash 1,119 352 Cash and cash equivalents, and restricted cash $ 11,950 $ 18,769 Recently Issued Accounting Pronouncements Leases (ASU 2016-02) : This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted. The standard will become effective for the Company January 1, 2021, but the Company is not required to present the impacts of the standard until it files its Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The Company is currently evaluating the impact this standard will have on the Company's consolidated financial statements. However, the Company expects the impact of this guidance on its consolidated financial statements could be significant, as its future minimum operating lease commitments totaled $21.9 million as of March 31, 2020. Credit Losses (ASU 2016-13) : Measurement of Credit Losses on Financial Instruments. Under the new guidance an entity is required to measure all credit losses on certain financial instruments, including trade receivables and various off-balance sheet credit exposures, using an expected credit loss model. This model incorporates past experience, current conditions and reasonable and supportable forecasts affecting collectability of these instruments. This standard will become effective for the Company beginning January 1, 2022. The Company is currently evaluating the timing and impact that adopting this new standard will have on the Company's consolidated financial statements. Recently adopted accounting pronouncements Revenue from Contracts with Customers (ASU 2014-09) (“Topic 606”) : This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. According to the superseding standard ASU 2015-14 that deferred the effective dates of the preceding, and because the Company is filing as an emerging growth company, the standard became effective for the Company January 1, 2019, but the Company was not required to present the impacts of the standard until the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The Company adopted this standard by recognizing the cumulative effect as an adjustment to opening accumulated deficit and non-controlling interests at January 1, 2019, under the modified retrospective method for contracts not completed as of the day of adoption. Under the modified retrospective method, the Company was not required to restate comparative financial information prior to the adoption of these standards and, therefore, such information presented prior to the filing of the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 will continue to be reported under the Company’s previous accounting policies. Impact on Financial Statements The following tables summarize the impacts of adopting the revenue recognition standard on the Company’s condensed consolidated statement of income: (in thousands) Legacy GAAP Adjustments due to Topic 606 As Reported Consolidated Statement of Income Three Months Ended March 31, 2020 Revenues: Commissions and agency fees 14,501 (2,690) 11,811 Franchise revenues 10,226 (1,781) 8,445 Expenses: Employee compensation and benefits 13,575 (72) 13,503 Bad debts 613 (304) 309 Income taxes 458 (499) (41) Net income 3,300 (3,596) (296) Earnings per share: Basic 0.07 (0.08) (0.01) Diluted 0.07 (0.08) (0.01) |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Commissions and fees The Company earns new and renewal commissions paid by insurance Carriers and fees paid by its clients for the binding of insurance coverage. The transactions price is set as the estimated commissions to be received over the term of the policy, net of a constraint for policy changes and cancellations. These commissions and fees are earned at a point in time upon the effective date of bound insurance coverage, as no performance obligation exists after coverage is bound. The Company also earns contingent commissions from the insurance Carriers based on the growth and the profitability of the premiums being placed with the insurance Carrier. For Agency Fees, the Company enters into a contract with the insured, in which the Company's performance obligation is to place an insurance policy. The transaction price of the agency fee is set at the time the sale is agreed upon, and is included in the contract. Agency Fee revenue is recognized at a point in time, which is the effective date of the policy. Contingent Commission revenue is generated from contracts between the Company and insurance Carriers, for which the Company is compensated for certain growth, profitability, and other performance-based metrics. The performance obligations for Contingent Commissions will vary by contract, but generally include the Company increasing profitable written premium with the insurance Carrier. The transaction price for Contingent Commissions is estimated based on all available information and is recognized over time as the Company completes its performance obligations, as the underlying policies are placed. Franchise revenues Franchise revenues include initial franchise fees and ongoing new and renewal royalty fees from franchisees. Revenue from Initial Franchise Fees is generated from a contract between the Company and a Franchisee. The Company's performance obligation is to provide initial training, onboarding, ongoing support and use of the Company's business operations over the period of the Franchise Agreement. The transaction price is set by the Franchise Agreement and revenue is recognized over time as the Company completes its performance obligations. Revenue from New and Renewal Royalty Fees is recorded by applying the sales- and usage-based royalties exception. Under the sales- and usage-based exception, the Company estimates the anticipated amount of the royalties to be received over the term of the policy. Revenue from Royalty Fees is recognized over time as the placement of the underlying policies occur. Contract Costs Additionally, the Company has evaluated ASC Topic 340 - Other Assets and Deferred Cost (“ASC 340”) which requires companies to defer certain incremental cost to obtain customer contracts, and certain costs to fulfill customer contracts. Incremental cost to obtain - The adoption of ASC 340 resulted in the Company deferring certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans in the Franchise Channel, in which the Company pays an incremental amount of compensation on new Franchise Agreements. These incremental costs are deferred and amortized over a 10-year period, which is consistent with the term of the contact. Costs to fulfill - The Company has evaluated the need to capitalize costs to fulfill customer contracts and has determined that there are no costs that meet the definition for capitalization under ASC 340. Disaggregation of Revenue The following table disaggregates revenue by Segment and source (in thousands) : Three Months Ended March 31, 2020 Franchise Channel Corporate Channel Total Type of revenue stream: Commissions and agency fees Renewal Commissions $ — $ 5,733 $ 5,733 New Business Commissions — 3,333 3,333 Agency Fees — 1,686 1,686 Contingent Commissions 694 365 1,059 Franchise revenues Renewal Royalty Fees 5,386 — 5,386 New Business Royalty Fees 2,048 — 2,048 Initial Franchise Fees 978 — 978 Other Franchise Revenues 33 — 33 Interest Income 169 — 169 Total Revenues $ 9,308 $ 11,117 $ 20,425 Timing of revenue recognition: Transferred at a point in time $ — $ 10,752 $ 10,752 Transferred over time 9,308 365 9,673 Total Revenues $ 9,308 $ 11,117 $ 20,425 Contract Balances The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands) : March 31, 2020 December 31, 2019 Increase/(decrease) Cost to obtain franchise contracts $ 1,077 $ 1,004 $ 73 Commissions and agency fees receivable, net 4,655 6,884 (2,229) Receivable from franchisees 14,336 13,616 720 Contract liability (1) 24,085 22,795 1,290 (1) Initial Franchise Fees to be recognized over the life of the contract Significant changes in contract liabilities are as follows (in thousands) : March 31, 2020 Contract liability at beginning of period $ 22,795 Revenue recognized during the period (978) New deferrals (1) 2,268 Contract liability at end of period $ 24,085 (1) Initial Franchise Fees where the consideration is received from the customer for services which are to be transferred to the Franchisee over the term of the Franchise Agreement |
Franchise Fees Receivable
Franchise Fees Receivable | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Franchise Fees Receivable | Franchise Fees Receivable The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at (in thousands) : March 31 December 31 2020 2019 Franchise fees receivable $ 16,097 $ 15,314 Less: Unamortized discount (4,052) (3,771) Less: Allowance for uncollectible franchise fees (69) (52) Net franchise fees receivable $ 11,976 $ 11,491 Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 2019 $ 52 Charges to bad debts 80 Write offs (63) Balance at March 31, 2020 $ 69 Balance at December 31, 2018 $ 455 Charges to bad debts 160 Write offs (121) Balance at March 31, 2019 $ 494 |
Allowance for Uncollectible Age
Allowance for Uncollectible Agency Fees | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Allowance for Uncollectible Agency Fees | Allowance for Uncollectible Agency Fees Activity in the allowance for uncollectible Agency Fees was as follows (in thousands) : Balance at December 31, 2019 $ 178 Charges to bad debts 228 Write offs (225) Balance at March 31, 2020 $ 181 Balance at December 31, 2018 $ 242 Charges to bad debts 241 Write offs (245) Balance at March 31, 2019 $ 238 |
Property and equipment
Property and equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment Property and equipment consisted of the following (in thousands) : March 31, December 31, 2020 2019 Furniture & fixtures $ 3,395 $ 3,012 Computer equipment 1,603 1,480 Network equipment 324 268 Phone system 907 885 Leasehold improvements 9,456 9,073 Total 15,685 14,718 Less accumulated depreciation (5,686) (5,176) Property and equipment, net $ 9,999 $ 9,542 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt On March 6, 2020, the Company refinanced its $13.0 million revolving credit facility and $40.0 million term note payable to a $25.0 million revolving credit facility and $80.0 million term note payable to finance general corporate purposes. The Company has until June 30, 2020 to draw down the $37.9 million additional term loan borrowing. The Company also has the right, subject to approval by the administrative agent and each issuing bank, to increase the commitments under the credit facilities an additional $50.0 million. As part of the refinancing, $172 thousand of debt issuance costs from previous debt were immediately recognized as interest expense. The $25.0 million revolving credit facility accrues interest on amounts drawn at an initial interest rate of LIBOR plus 2.50%, then at an interest rate determined by the Company's leverage ratio for the preceding period. At March 31, 2020, the Company had $5.0 million drawn against the revolver and had a letter of credit of $333 thousand applied against the maximum borrowing availability. Thus, amounts available to draw totaled $19.7 million. The revolving credit facility is collateralized by substantially all the Company’s assets, which includes rights to future commissions. The term note is payable in quarterly installments of $500 thousand the first twelve months, $1.0 million the next twelve months and $2.0 million the last twelve months, with a balloon payment on March 6, 2023. The note is collateralized by substantially all of the Company’s assets, which includes rights to future commissions. Interest is calculated initially at LIBOR plus 2.50%, then at an interest rate based on the Company's leverage ratio for the preceding period. As of March 31, 2020, the Company had $42.1 million of the term note drawn, with the remaining $37.9 million required to be drawn by June 30, 2020. The interest rate for each leverage ratio tier are as follows: Leverage Ratio Interest Rate < 1.50x LIBOR + 175 bps > 1.50x LIBOR + 200 bps > 2.50x LIBOR + 225 bps > 3.50x LIBOR + 250 bps Maturities of the term note payable for the next four years are as follows ( in thousands ): Amount 2020 $ 1,500 2021 3,500 2022 7,000 2023 30,100 Total $ 42,100 The Company’s note payable agreement contains certain restrictions and covenants. Under these restrictions, the Company is limited in the amount of debt incurred and distributions payable. In addition, the credit agreement contains certain change of control provisions that, if broken, would trigger a default. Finally, the Company must maintain certain financial ratios. As of March 31, 2020, the Company was in compliance with these covenants. Because of both instruments’ variable interest rate, the note payable balance at March 31, 2020 and December 31, 2019, approximates fair value using Level 2 inputs, described below. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets. • Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset. • Level 3—Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesThe Company leases its facilities under non-cancelable operating leases, expiring in various years through 2029. In addition to monthly lease payments, the lease agreements require the Company to reimburse the lessors for its portion of operating costs each year. Rent expense was $532 thousand and $447 thousand for the three months ended March 31, 2020 and 2019. The following is a schedule of future minimum lease payments as of March 31, 2020 (in thousands) : Amount 2020 $ 2,113 2021 2,793 2022 2,762 2023 2,578 2024 2,394 Thereafter 9,231 Total $ 21,871 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes As a result of the Reorganization Transactions and the Offering, GSHD became the sole managing member of GF, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, GF is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by GF is passed through to and included in the taxable income or loss of its members, including GSHD, on a pro rata basis. GSHD is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to GSHD's allocable share of income of GF. Income tax expense Provision for/(benefit from) income taxes for the three months ended March 31, 2020 was $(41) thousand compared to $744 thousand for the three months ended March 31, 2019. The effective tax rate was 12% for the three months ended March 31, 2020 and 9% for the three months ended March 31, 2019. These effective tax rates are calculated using extended values from our condensed consolidated statements of income, and are therefore more precise tax rates than can be calculated from rounded values. The increase in the effective tax rate for the period ended March 31, 2020 compared to the period ended March 31, 2019 was primarily due to an increase in the percentage of income attributable to Goosehead Insurance, Inc. Deferred taxes Deferred tax assets at March 31, 2020 were $26.9 million compared to $15.5 million at December 31, 2019. The primary contributing factor to the increase in deferred tax assets is additional redemptions of LLC Units of GF for shares of Class A common stock of GSHD during the three months ended March 31, 2020. Tax Receivable Agreement GF intends to make an election under Section 754 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”) effective for each taxable year in which a redemption or exchange of LLC Units and corresponding Class B common stock for shares of Class A common stock occurs. Future taxable redemptions or exchanges are expected to result in tax basis adjustments to the assets of GF that will be allocated to the Company and thus produce favorable tax attributes. These tax attributes would not be available to GSHD in the absence of those transactions. The anticipated tax basis adjustments are expected to reduce the amount of tax that GSHD would otherwise be required to pay in the future. GSHD entered into a tax receivable agreement with the Pre-IPO LLC Members on May 1, 2018 that provides for the payment by GSHD to the Pre-IPO LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that GSHD actually realizes as a result of (i) any increase in tax basis in GSHD's assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. During the three months ended March 31, 2020, an aggregate of 791 thousand LLC Units were redeemed by the Pre-IPO LLC Members for newly issued shares of Class A common stock. In connection with these redemptions, GSHD received 791 thousand LLC Units, which resulted in an increase in the tax basis of its investment in GF subject to the provisions of the tax receivable agreement. The Company recognized a liability for the TRA Payments |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Class A Common Stock GSHD has a total of 16,032 thousand shares of its Class A common stock outstanding at March 31, 2020. Each share of Class A common stock holds economic rights and entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Class B Common Stock GSHD has a total of 20,264 thousand shares of its Class B common stock outstanding at March 31, 2020. Each share of Class B common stock has no economic rights but entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to GSHD's shareholders for their vote or approval, except as otherwise required by applicable law, by agreement, or by GSHD's certificate of incorporation. Earnings Per Share The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three months ended March 31, 2020 and 2019, divided by the basic weighted average number of Class A common stock as of March 31, 2020 and March 31, 2019 (in thousands, except per share amounts) . Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GSHD by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities (in thousands, except per share amounts) . The Company has not included the effects of conversion of Class B shares to Class A shares in the diluted EPS calculation using the "if-converted" method, because doing so has no impact on diluted EPS. Three Months Ended March 31, 2020 Three Months Ended Numerator: Income (loss) before taxes $ (337) $ 8,062 Less: income (loss) before taxes attributable to non-controlling interests (140) 4,909 Income (loss) before taxes attributable to GSHD (197) 3,153 Less: income tax expense (benefit) attributable to GSHD (41) 681 Net income (loss) attributable to GSHD $ (156) $ 2,472 Denominator: Weighted average shares of Class A common stock outstanding - basic 15,564 14,211 Effect of dilutive securities: Stock options (1) — 1,078 Weighted average shares of Class A common stock outstanding - diluted 15,564 15,289 Earnings (loss) per share of Class A common stock - basic $ (0.01) $ 0.17 Earnings (loss) per share of Class A common stock - diluted $ (0.01) $ 0.16 (1) 1,840 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three months ended March 31, 2020 because the effect would have been anti-dilutive, as we recorded a net loss for the three months ended March 31, 2020 |
Non-controlling interest
Non-controlling interest | 3 Months Ended |
Mar. 31, 2020 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling interest | Non-controlling interest Following the Offering, GSHD became the sole managing member of GF and, as a result, it consolidates the financial results of GF. GSHD reports a non-controlling interest representing the economic interest in GF held by the other members of GF. On a quarterly basis, GF makes distributions to the LLC Unit holders on a pro rata basis to facilitate the LLC Unit holder's quarterly tax payments. For the three months ended March 31, 2020, GF made distributions of $1.7 million, of which $1.0 million where made to Pre-IPO LLC Members. The remaining $0.7 million were made to GSHD and were eliminated in consolidation. For the three months ended March 31, 2019, GF made distributions of $0.4 million, of which $0.2 million were made to Pre-IPO LLC Members.The remaining $0.2 million were made to GSHD and were eliminated in consolidation. Under the amended and restated Goosehead Financial, LLC Agreement, the Pre-IPO LLC Members have the right, from and after the completion of the Offering (subject to the terms of the amended and restated Goosehead Financial, LLC Agreement), to require GSHD to redeem all or a portion of their LLC Units for, at GSHD's election, newly-issued shares of Class A common stock on a one-for-one basis or a cash payment equal to the volume weighted average market price of one share of GSHD's Class A common stock for each LLC Unit redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the amended and restated Goosehead Financial, LLC Agreement. Additionally, in the event of a redemption request by a Pre-IPO LLC Member, GSHD may, at its option, effect a direct exchange of cash or Class A common stock for LLC Units in lieu of such a redemption. Shares of Class B common stock will be cancelled on a one-for-one basis if GSHD, at the election of a Pre-IPO LLC Member, redeems or exchanges LLC Units of such Pre-IPO LLC Member pursuant to the terms of the amended and restated Goosehead Financial, LLC Agreement. Except for transfers to GSHD pursuant to the amended and restated Goosehead Financial, LLC Agreement or to certain permitted transferees, the Pre-IPO LLC Members are not permitted to sell, transfer or otherwise dispose of any LLC Units or shares of Class B common stock. During the three months ended March 31, 2020, an aggregate of 791 thousand LLC Units were redeemed by the non-controlling interest holders. Pursuant to the GF LLC Agreement, GSHD issued 791 thousand shares of Class A common stock in connection with these redemptions and received 791 thousand LLC Interests, increasing GSHD's ownership interest in GF. Simultaneously, and in connection with these redemptions, 791 thousand shares of Class B common stock were surrendered and cancelled. The following table summarizes the ownership interest in GF as of March 31, 2020 (in thousands) : March 31, 2020 LLC Units Ownership % Number of LLC Units held by GSHD 16,032 44.2% Number of LLC Units held by non-controlling interest holders 20,264 55.8% Number of LLC Units outstanding 36,296 100.0% The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to GSHD and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentage for the three months ended March 31, 2020 was 57.1%. The following table summarizes the effects of changes in ownership in GF on the equity of GSHD for the three months ended March 31, 2020 and 2019 as follows (in thousands) : Three Months Ended March 31, 2020 2020 2019 Net Income (loss) attributable to Goosehead Insurance Inc. $ (156) $ 2,472 Transfers (to) from non-controlling interests: Decrease in additional paid-in capital as a result of the redemption of LLC interests (869) (679) Increase in additional paid-in capital as a result of activity under employee stock purchase plan 116 — Total effect of changes in ownership interest on equity attributable to Goosehead Insurance Inc. $ (909) $ 1,793 |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based CompensationStock option expense was $498 thousand and $368 thousand for the three months ended March 31, 2020 and 2019, respectively |
Dividends
Dividends | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Dividends | Dividends On March 7, 2019, GF approved a $15.0 million extraordinary dividend to all holders of LLC Units, including GSHD. The board of directors of the Company then declared an extraordinary dividend of $0.41 (rounded) to all holders of Class A common stock of GSHD with a record date of March 18, 2019, paid on or before April 1, 2019. A summary of the total amounts declared by GF is as follows (in thousands) : LLC Units held as of March 18, 2019 Dividends declared Class A common stockholders 14,421 $ 5,962 Class B common stockholders via LLC Units held 21,864 9,038 Total 36,285 $ 15,000 Any future extraordinary dividends will be declared at the sole discretion of GF's managing members with respect to GF and the Company's board of directors with respect to GSHD. In determining whether a future extraordinary dividend will be declared by the Company, the board of directors may, at its sole discretion, consider the following: the Company's financial condition and operating results, the Company's available cash and current and anticipated cash needs, the Company's capital requirements, any contractual, legal, tax and regulatory restrictions, general economic and business conditions, and such other factors or conditions as the board of directors deems relevant. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment InformationThe Company has two reportable Segments: Corporate Channel and Franchise Channel. The Corporate Channel consists of company-owned and financed operations with employees who are hired, trained, and managed by Goosehead. The Franchise Channel network consists of Franchisee operations that are owned and managed by individual business owners. These business owners have a contractual relationship with Goosehead to use the Company's processes, systems, and back-office support team to sell insurance and manage their business. In exchange, Goosehead is entitled to an Initial Franchise Fee and ongoing royalty fees. Allocations of contingent commissions and certain operating expenses are based on reasonable assumptions and estimates primarily using revenue, headcount and other information. The Company’s chief operating decision maker uses net income before interest, income taxes, depreciation and amortization, adjusted to exclude equity-based compensation and other non-operating items, including, among other things, certain non-cash charges and certain non-recurring or non-operating gains or losses (“Adjusted EBITDA”) as a performance measure to manage resources and make decisions about the business. Summarized financial information concerning the Company’s reportable Segments is shown in the following tables (in thousands). There are no intersegment sales, only interest income and interest expense related to an intersegment line of credit, all of which eliminate in consolidation. The “Other” column includes any income and expenses not allocated to reportable Segments and corporate-related items, including equity-based compensation, certain legal expenses and interest related to the note payable. Franchise Corporate Other Total Three months ended March 31, 2020: Revenues: Commissions and agency fees Renewal Commissions $ — $ 5,733 $ — $ 5,733 Agency Fees — 1,686 — 1,686 New Business Commissions — 3,333 — 3,333 Contingent Commissions 694 365 — 1,059 Total Commissions and Agency Fees 694 11,117 — 11,811 Franchise revenue Renewal Royalty Fees 5,386 — — 5,386 New Business Royalty Fees 2,048 — — 2,048 Initial Franchise Fees 978 — — 978 Other Income 33 — — 33 Total Franchise Revenues 8,445 — — 8,445 Interest income Interest Income 169 — — 169 Total Interest Income 169 — — 169 Total 9,308 11,117 — 20,425 Operating expenses: Employee compensation and benefits, excluding equity based compensation 5,896 7,109 — 13,005 General and administrative expenses 2,225 2,709 938 5,872 Bad debts 81 228 — 309 Total 8,202 10,046 938 19,186 Adjusted EBITDA 1,106 1,071 (938) 1,239 Other income (expense) 66 — — 66 Equity based compensation — — (498) (498) Interest expense — — (604) (604) Depreciation and amortization (313) (227) — (540) Income tax benefit — — 41 41 Net income $ 859 $ 844 $ (1,999) $ (296) March 31, 2020: Total Assets $ 23,527 $ 16,006 $ 36,355 $ 75,888 Franchise Corporate Other Total Three months ended March 31, 2019: Revenues: Commissions and agency fees Renewal Commissions $ — $ 4,789 $ — $ 4,789 Agency Fees — 1,437 — 1,437 New Business Commissions — 2,459 — 2,459 Contingent Commissions 4,215 3,270 — 7,485 Total Commissions and Agency Fees 4,215 11,955 — 16,170 Franchise revenue Renewal Royalty Fees 3,763 — — 3,763 New Business Royalty Fees 1,355 — — 1,355 Initial Franchise Fees 1,710 — — 1,710 Other Income — — — — Total Franchise Revenues 6,828 — — 6,828 Interest income Interest Income 135 — — 135 Total Interest Income 135 — — 135 Total 11,178 11,955 — 23,133 Operating expenses: Employee compensation and benefits, excluding equity based compensation 3,755 5,068 — 8,823 General and administrative expenses 1,632 1,902 896 4,430 Bad debts 160 241 — 401 Total 5,547 7,211 896 13,654 Adjusted EBITDA 5,631 4,744 (896) 9,479 Equity based compensation — — (368) (368) Interest expense — — (626) (626) Depreciation and amortization (184) (239) — (423) Taxes — — (744) (744) Net income $ 5,447 $ 4,505 $ (2,634) $ 7,318 March 31, 2019: Total Assets $ 16,054 $ 7,083 $ 25,265 $ 48,402 |
Litigation
Litigation | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | LitigationFrom time to time, GSHD may be involved in various legal proceedings, lawsuits and claims incidental to the conduct of the Company's business. The amount of any loss from the ultimate outcomes is not probable or reasonably estimable. It is the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company. |
Subsequent events
Subsequent events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent events Credit agreement On April 13, 2020, the Company executed Amendment No. 1 to the credit agreement dated March 6, 2020. The amendment allowed the Company to delay drawing down the full amount of the $80.0 million term note until June 30, 2020 and extended the deadline to pay a special dividend until December 31, 2020. Stock option grant On April 1, 2020, the Company granted an additional 900,000 stock options to its Managing Directors at an exercise price equal to $40.88 per share. The grant date fair value of $16.31 per option was determined using the Black-Scholes valuation model using the following assumptions: Expected volatility 40 % Expected dividend yield — % Expected term (in years) 6.5 Risk-free interest rate 0.47 % four |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Combination | All intercompany accounts and transactions have been eliminated in consolidation. |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the annual disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial positions at March 31, 2020, the condensed consolidated results of operations, stockholders' equity and statements of cash flows for the three months ended March 31, 2020 and 2019. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Annual Report on Form 10-K. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its revenue. Revenue is expected to be higher during the Company’s fourth quarter primarily due to the timing of contingent commission revenue recognition. Impact of the coronavirus (“COVID-19”) pandemic The extent to which the COVID-19 pandemic and the related economic impact may affect our financial condition or results of operations is uncertain. The extent of the impact on our operational and financial performance will depend on various factors, including the duration and spread of the outbreak and its impact on home sales and consumer spending. To date, the pandemic has not increased our costs of or access to capital under our term note and revolving credit facility and we do not believe it is reasonably likely to in the future. In addition, we do not believe that the pandemic will affect our ongoing ability to meet the covenants in our debt instruments, including under our term note and revolving credit facility. To date, the pandemic has not impacted the collectibility of receivables or adversely affected our revenue. Due to the nature of our business, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. We are not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained, any such changes will be recognized in the consolidated financial statements. Accordingly, actual results could differ from those estimates as more information becomes known. |
Income Taxes | Income Taxes The Company accounts for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. |
Restricted Cash | Restricted CashThe Company holds premiums received from the insured, but not yet remitted to the insurance Carrier in a fiduciary capacity. |
Recent Accounting Pronouncements | Recently Issued Accounting Pronouncements Leases (ASU 2016-02) : This standard establishes a new lease accounting model, which introduces the recognition of lease assets and liabilities for those leases classified as operating leases under previous GAAP. It should be applied using a modified retrospective approach, with the option to elect various practical expedients. Early adoption is permitted. The standard will become effective for the Company January 1, 2021, but the Company is not required to present the impacts of the standard until it files its Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The Company is currently evaluating the impact this standard will have on the Company's consolidated financial statements. However, the Company expects the impact of this guidance on its consolidated financial statements could be significant, as its future minimum operating lease commitments totaled $21.9 million as of March 31, 2020. Credit Losses (ASU 2016-13) : Measurement of Credit Losses on Financial Instruments. Under the new guidance an entity is required to measure all credit losses on certain financial instruments, including trade receivables and various off-balance sheet credit exposures, using an expected credit loss model. This model incorporates past experience, current conditions and reasonable and supportable forecasts affecting collectability of these instruments. This standard will become effective for the Company beginning January 1, 2022. The Company is currently evaluating the timing and impact that adopting this new standard will have on the Company's consolidated financial statements. Recently adopted accounting pronouncements Revenue from Contracts with Customers (ASU 2014-09) (“Topic 606”) : This standard supersedes the existing revenue recognition guidance and provides a new framework for recognizing revenue. The core principle of the standard is that an entity should recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. Guidance subsequent to ASU 2014-09 has been issued to clarify various provisions in the standard, including principal versus agent considerations, identifying performance obligations, licensing transactions, as well as various technical corrections and improvements. According to the superseding standard ASU 2015-14 that deferred the effective dates of the preceding, and because the Company is filing as an emerging growth company, the standard became effective for the Company January 1, 2019, but the Company was not required to present the impacts of the standard until the Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The Company adopted this standard by recognizing the cumulative effect as an adjustment to opening accumulated deficit and non-controlling interests at January 1, 2019, under the modified retrospective method for contracts not completed as of the day of adoption. Under the modified retrospective method, the Company was not required to restate comparative financial information prior to the adoption of these standards and, therefore, such information presented prior to the filing of the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 will continue to be reported under the Company’s previous accounting policies. Impact on Financial Statements The following tables summarize the impacts of adopting the revenue recognition standard on the Company’s condensed consolidated statement of income: (in thousands) Legacy GAAP Adjustments due to Topic 606 As Reported Consolidated Statement of Income Three Months Ended March 31, 2020 Revenues: Commissions and agency fees 14,501 (2,690) 11,811 Franchise revenues 10,226 (1,781) 8,445 Expenses: Employee compensation and benefits 13,575 (72) 13,503 Bad debts 613 (304) 309 Income taxes 458 (499) (41) Net income 3,300 (3,596) (296) Earnings per share: Basic 0.07 (0.08) (0.01) Diluted 0.07 (0.08) (0.01) (in thousands) Legacy GAAP Adjustments due to Topic 606 As Reported Consolidated Balance Sheet March 31, 2020 Assets: Commissions and agency fees receivable, net 2,513 2,142 4,655 Receivable from franchisees, net 4,633 9,703 14,336 Deferred income taxes, net 26,581 319 26,900 Other assets 504 1,314 1,818 Liabilities: Accounts payable and accrued expenses 4,398 117 4,515 Unearned revenue 175 (175) — Contract liabilities — 24,085 24,085 Liabilities under tax receivable agreement, net of current portion 22,997 23 23,020 Stockholders' Equity: Accumulated Deficit (19,829) (4,138) (23,967) Non-controlling interests (16,320) (5,954) (22,274) Total equity (20,097) (9,891) (29,988) (in thousands) Legacy GAAP Adjustments due to Topic 606 As Reported Consolidated Statement of Cash Flows Three Months Ended March 31, 2020 Operating Cash Flows: Net Income 3,300 (3,596) (296) Bad debt expense 613 (304) 309 Receivable from franchisees (1,017) 208 (809) Commissions and agency fees receivables (630) 2,631 2,001 Other assets (348) (113) (461) Accounts payable and accrued expenses (786) (458) (1,244) Contract liabilities — 1,290 1,290 Unearned revenue (340) 340 — Net cash used for operating activities (1,475) — (1,475) |
Framework for Measuring Fair Value | The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets. • Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset. • Level 3—Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Restrictions on Cash and Cash Equivalents | The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statement of cash flows for the three months ended March 31, 2020 and 2019 (in thousands) : March 31, 2020 2019 Cash and cash equivalents $ 10,831 $ 18,417 Restricted cash 1,119 352 Cash and cash equivalents, and restricted cash $ 11,950 $ 18,769 |
Schedule of Reconciliation of Cash and Restricted Cash | The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statement of cash flows for the three months ended March 31, 2020 and 2019 (in thousands) : March 31, 2020 2019 Cash and cash equivalents $ 10,831 $ 18,417 Restricted cash 1,119 352 Cash and cash equivalents, and restricted cash $ 11,950 $ 18,769 |
Impact of Adopting the Revenue Recognition Standard | The following tables summarize the impacts of adopting the revenue recognition standard on the Company’s condensed consolidated statement of income: (in thousands) Legacy GAAP Adjustments due to Topic 606 As Reported Consolidated Statement of Income Three Months Ended March 31, 2020 Revenues: Commissions and agency fees 14,501 (2,690) 11,811 Franchise revenues 10,226 (1,781) 8,445 Expenses: Employee compensation and benefits 13,575 (72) 13,503 Bad debts 613 (304) 309 Income taxes 458 (499) (41) Net income 3,300 (3,596) (296) Earnings per share: Basic 0.07 (0.08) (0.01) Diluted 0.07 (0.08) (0.01) (in thousands) Legacy GAAP Adjustments due to Topic 606 As Reported Consolidated Balance Sheet March 31, 2020 Assets: Commissions and agency fees receivable, net 2,513 2,142 4,655 Receivable from franchisees, net 4,633 9,703 14,336 Deferred income taxes, net 26,581 319 26,900 Other assets 504 1,314 1,818 Liabilities: Accounts payable and accrued expenses 4,398 117 4,515 Unearned revenue 175 (175) — Contract liabilities — 24,085 24,085 Liabilities under tax receivable agreement, net of current portion 22,997 23 23,020 Stockholders' Equity: Accumulated Deficit (19,829) (4,138) (23,967) Non-controlling interests (16,320) (5,954) (22,274) Total equity (20,097) (9,891) (29,988) (in thousands) Legacy GAAP Adjustments due to Topic 606 As Reported Consolidated Statement of Cash Flows Three Months Ended March 31, 2020 Operating Cash Flows: Net Income 3,300 (3,596) (296) Bad debt expense 613 (304) 309 Receivable from franchisees (1,017) 208 (809) Commissions and agency fees receivables (630) 2,631 2,001 Other assets (348) (113) (461) Accounts payable and accrued expenses (786) (458) (1,244) Contract liabilities — 1,290 1,290 Unearned revenue (340) 340 — Net cash used for operating activities (1,475) — (1,475) |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table disaggregates revenue by Segment and source (in thousands) : Three Months Ended March 31, 2020 Franchise Channel Corporate Channel Total Type of revenue stream: Commissions and agency fees Renewal Commissions $ — $ 5,733 $ 5,733 New Business Commissions — 3,333 3,333 Agency Fees — 1,686 1,686 Contingent Commissions 694 365 1,059 Franchise revenues Renewal Royalty Fees 5,386 — 5,386 New Business Royalty Fees 2,048 — 2,048 Initial Franchise Fees 978 — 978 Other Franchise Revenues 33 — 33 Interest Income 169 — 169 Total Revenues $ 9,308 $ 11,117 $ 20,425 Timing of revenue recognition: Transferred at a point in time $ — $ 10,752 $ 10,752 Transferred over time 9,308 365 9,673 Total Revenues $ 9,308 $ 11,117 $ 20,425 |
Contract Balances | The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands) : March 31, 2020 December 31, 2019 Increase/(decrease) Cost to obtain franchise contracts $ 1,077 $ 1,004 $ 73 Commissions and agency fees receivable, net 4,655 6,884 (2,229) Receivable from franchisees 14,336 13,616 720 Contract liability (1) 24,085 22,795 1,290 (1) Initial Franchise Fees to be recognized over the life of the contract Significant changes in contract liabilities are as follows (in thousands) : March 31, 2020 Contract liability at beginning of period $ 22,795 Revenue recognized during the period (978) New deferrals (1) 2,268 Contract liability at end of period $ 24,085 (1) Initial Franchise Fees where the consideration is received from the customer for services which are to be transferred to the Franchisee over the term of the Franchise Agreement |
Franchise Fees Receivable (Tabl
Franchise Fees Receivable (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Franchise Fees Receivable | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following at (in thousands) : March 31 December 31 2020 2019 Franchise fees receivable $ 16,097 $ 15,314 Less: Unamortized discount (4,052) (3,771) Less: Allowance for uncollectible franchise fees (69) (52) Net franchise fees receivable $ 11,976 $ 11,491 |
Schedule of Allowance For Uncollectible Franchise Fees | Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 2019 $ 52 Charges to bad debts 80 Write offs (63) Balance at March 31, 2020 $ 69 Balance at December 31, 2018 $ 455 Charges to bad debts 160 Write offs (121) Balance at March 31, 2019 $ 494 |
Allowance for Uncollectible A_2
Allowance for Uncollectible Agency Fees (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Allowance for Uncollectible Agency Fees | Activity in the allowance for uncollectible Agency Fees was as follows (in thousands) : Balance at December 31, 2019 $ 178 Charges to bad debts 228 Write offs (225) Balance at March 31, 2020 $ 181 Balance at December 31, 2018 $ 242 Charges to bad debts 241 Write offs (245) Balance at March 31, 2019 $ 238 |
Property and equipment (Tables)
Property and equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands) : March 31, December 31, 2020 2019 Furniture & fixtures $ 3,395 $ 3,012 Computer equipment 1,603 1,480 Network equipment 324 268 Phone system 907 885 Leasehold improvements 9,456 9,073 Total 15,685 14,718 Less accumulated depreciation (5,686) (5,176) Property and equipment, net $ 9,999 $ 9,542 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Interest Rate Dependent of Leverage Ratio | The interest rate for each leverage ratio tier are as follows: Leverage Ratio Interest Rate < 1.50x LIBOR + 175 bps > 1.50x LIBOR + 200 bps > 2.50x LIBOR + 225 bps > 3.50x LIBOR + 250 bps |
Schedule of Maturities of Note Payable | Maturities of the term note payable for the next four years are as follows ( in thousands ): Amount 2020 $ 1,500 2021 3,500 2022 7,000 2023 30,100 Total $ 42,100 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | The following is a schedule of future minimum lease payments as of March 31, 2020 (in thousands) : Amount 2020 $ 2,113 2021 2,793 2022 2,762 2023 2,578 2024 2,394 Thereafter 9,231 Total $ 21,871 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of Calculation of EPS and Pro Forma EPS | The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three months ended March 31, 2020 and 2019, divided by the basic weighted average number of Class A common stock as of March 31, 2020 and March 31, 2019 (in thousands, except per share amounts) . Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GSHD by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities (in thousands, except per share amounts) . The Company has not included the effects of conversion of Class B shares to Class A shares in the diluted EPS calculation using the "if-converted" method, because doing so has no impact on diluted EPS. Three Months Ended March 31, 2020 Three Months Ended Numerator: Income (loss) before taxes $ (337) $ 8,062 Less: income (loss) before taxes attributable to non-controlling interests (140) 4,909 Income (loss) before taxes attributable to GSHD (197) 3,153 Less: income tax expense (benefit) attributable to GSHD (41) 681 Net income (loss) attributable to GSHD $ (156) $ 2,472 Denominator: Weighted average shares of Class A common stock outstanding - basic 15,564 14,211 Effect of dilutive securities: Stock options (1) — 1,078 Weighted average shares of Class A common stock outstanding - diluted 15,564 15,289 Earnings (loss) per share of Class A common stock - basic $ (0.01) $ 0.17 Earnings (loss) per share of Class A common stock - diluted $ (0.01) $ 0.16 (1) 1,840 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three months ended March 31, 2020 because the effect would have been anti-dilutive, as we recorded a net loss for the three months ended March 31, 2020 |
Non-controlling interest (Table
Non-controlling interest (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Noncontrolling Interest [Abstract] | |
Schedule of Ownership Interests | The following table summarizes the ownership interest in GF as of March 31, 2020 (in thousands) : March 31, 2020 LLC Units Ownership % Number of LLC Units held by GSHD 16,032 44.2% Number of LLC Units held by non-controlling interest holders 20,264 55.8% Number of LLC Units outstanding 36,296 100.0% |
Effects of Changes in Ownership Interests on Equity | The following table summarizes the effects of changes in ownership in GF on the equity of GSHD for the three months ended March 31, 2020 and 2019 as follows (in thousands) : Three Months Ended March 31, 2020 2020 2019 Net Income (loss) attributable to Goosehead Insurance Inc. $ (156) $ 2,472 Transfers (to) from non-controlling interests: Decrease in additional paid-in capital as a result of the redemption of LLC interests (869) (679) Increase in additional paid-in capital as a result of activity under employee stock purchase plan 116 — Total effect of changes in ownership interest on equity attributable to Goosehead Insurance Inc. $ (909) $ 1,793 |
Dividends (Tables)
Dividends (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Summary of total estimated dividends to be paid | A summary of the total amounts declared by GF is as follows (in thousands) : LLC Units held as of March 18, 2019 Dividends declared Class A common stockholders 14,421 $ 5,962 Class B common stockholders via LLC Units held 21,864 9,038 Total 36,285 $ 15,000 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | Franchise Corporate Other Total Three months ended March 31, 2020: Revenues: Commissions and agency fees Renewal Commissions $ — $ 5,733 $ — $ 5,733 Agency Fees — 1,686 — 1,686 New Business Commissions — 3,333 — 3,333 Contingent Commissions 694 365 — 1,059 Total Commissions and Agency Fees 694 11,117 — 11,811 Franchise revenue Renewal Royalty Fees 5,386 — — 5,386 New Business Royalty Fees 2,048 — — 2,048 Initial Franchise Fees 978 — — 978 Other Income 33 — — 33 Total Franchise Revenues 8,445 — — 8,445 Interest income Interest Income 169 — — 169 Total Interest Income 169 — — 169 Total 9,308 11,117 — 20,425 Operating expenses: Employee compensation and benefits, excluding equity based compensation 5,896 7,109 — 13,005 General and administrative expenses 2,225 2,709 938 5,872 Bad debts 81 228 — 309 Total 8,202 10,046 938 19,186 Adjusted EBITDA 1,106 1,071 (938) 1,239 Other income (expense) 66 — — 66 Equity based compensation — — (498) (498) Interest expense — — (604) (604) Depreciation and amortization (313) (227) — (540) Income tax benefit — — 41 41 Net income $ 859 $ 844 $ (1,999) $ (296) March 31, 2020: Total Assets $ 23,527 $ 16,006 $ 36,355 $ 75,888 Franchise Corporate Other Total Three months ended March 31, 2019: Revenues: Commissions and agency fees Renewal Commissions $ — $ 4,789 $ — $ 4,789 Agency Fees — 1,437 — 1,437 New Business Commissions — 2,459 — 2,459 Contingent Commissions 4,215 3,270 — 7,485 Total Commissions and Agency Fees 4,215 11,955 — 16,170 Franchise revenue Renewal Royalty Fees 3,763 — — 3,763 New Business Royalty Fees 1,355 — — 1,355 Initial Franchise Fees 1,710 — — 1,710 Other Income — — — — Total Franchise Revenues 6,828 — — 6,828 Interest income Interest Income 135 — — 135 Total Interest Income 135 — — 135 Total 11,178 11,955 — 23,133 Operating expenses: Employee compensation and benefits, excluding equity based compensation 3,755 5,068 — 8,823 General and administrative expenses 1,632 1,902 896 4,430 Bad debts 160 241 — 401 Total 5,547 7,211 896 13,654 Adjusted EBITDA 5,631 4,744 (896) 9,479 Equity based compensation — — (368) (368) Interest expense — — (626) (626) Depreciation and amortization (184) (239) — (423) Taxes — — (744) (744) Net income $ 5,447 $ 4,505 $ (2,634) $ 7,318 March 31, 2019: Total Assets $ 16,054 $ 7,083 $ 25,265 $ 48,402 |
Subsequent events (Tables)
Subsequent events (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Stock Option Grant, Valuation Assumptions | The grant date fair value of $16.31 per option was determined using the Black-Scholes valuation model using the following assumptions: Expected volatility 40 % Expected dividend yield — % Expected term (in years) 6.5 Risk-free interest rate 0.47 % |
Organization - Narrative (Detai
Organization - Narrative (Details) shares in Thousands | May 02, 2018 | May 01, 2018$ / sharesshares | Mar. 31, 2020franchiselocation | Mar. 31, 2019franchiselocation |
Subsidiary, Sale of Stock [Line Items] | ||||
Corporate-owned locations | location | 7 | 7 | ||
Franchise locations sold | 84 | 63 | ||
Operating franchise locations | 679 | 501 | ||
Franchises purchased | 0 | 0 | ||
Initial Public Offering | Class A Common Stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares issued (in shares) | shares | 9,810 | |||
Share price (in dollars per share) | $ / shares | $ 10 | |||
Over-Allotment Option | Class A Common Stock | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares issued (in shares) | shares | 1,280 | |||
Goosehead Insurance, Inc. | Goosehead Financial, LLC | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Ownership interest | 37.30% | |||
Pre-IPO LLC Members | Goosehead Financial, LLC | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Ownership interest | 62.70% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Accounting Policies [Abstract] | |||
Premiums payable | $ 1,119 | $ 923 | $ 352 |
Future minimum operating lease commitments | $ 21,871 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 10,831 | $ 14,337 | $ 18,417 | |
Restricted cash | 1,119 | 352 | ||
Cash and cash equivalents, and restricted cash | $ 11,950 | $ 15,260 | $ 18,769 | $ 19,011 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Impact of Revenue Recognition Standard (Details) - USD ($) | 3 Months Ended | |||||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | $ 20,425,000 | [1] | $ 23,133,000 | [2] | ||
Employee compensation and benefits | 13,503,000 | [1] | 9,191,000 | [2] | ||
Bad debt expense | 309,000 | [1] | 401,000 | [2] | ||
Taxes | (41,000) | [1] | 744,000 | [2] | ||
Net income (loss) | $ (296,000) | [1] | $ 7,318,000 | [2] | ||
Basic (in dollars per share) | $ (0.01) | [1] | $ 0.17 | [2] | ||
Diluted (in dollars per share) | $ (0.01) | [1] | $ 0.16 | [2] | ||
Commissions and agency fees receivable, net | $ 4,655,000 | $ 6,884,000 | ||||
Receivable from franchisees | 14,336,000 | 13,616,000 | ||||
Deferred income taxes, net | 26,900,000 | 15,537,000 | ||||
Other assets | 1,818,000 | 1,357,000 | ||||
Accounts payable and accrued expenses | 4,515,000 | 5,033,000 | ||||
Unearned revenue | 0 | |||||
Contract liability | 24,085,000 | 22,795,000 | ||||
Other Liabilities | 23,020,000 | |||||
Accumulated deficit | (23,967,000) | (23,811,000) | ||||
Non-controlling interests | (22,274,000) | (22,000,000) | ||||
Total equity | (29,988,000) | $ (31,851,000) | $ (31,007,000) | $ (25,203,000) | ||
Receivable from franchisees | (809,000) | (565,000) | ||||
Commissions and agency fees receivable | 2,001,000 | (553,000) | ||||
Other assets | (461,000) | 0 | ||||
Accounts payable and accrued expenses | (1,244,000) | (356,000) | ||||
Contract liabilities | 1,290,000 | 0 | ||||
Unearned revenue | 0 | (199,000) | ||||
Net cash used for operating activities | (1,475,000) | 1,802,000 | ||||
Legacy GAAP | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Employee compensation and benefits | 13,575,000 | |||||
Bad debt expense | 613,000 | |||||
Taxes | 458,000 | |||||
Net income (loss) | $ 3,300,000 | |||||
Basic (in dollars per share) | $ 0.07 | |||||
Diluted (in dollars per share) | $ 0.07 | |||||
Commissions and agency fees receivable, net | $ 2,513,000 | |||||
Receivable from franchisees | 4,633,000 | |||||
Deferred income taxes, net | 26,581,000 | |||||
Other assets | 504,000 | |||||
Accounts payable and accrued expenses | 4,398,000 | |||||
Unearned revenue | 175,000 | |||||
Contract liability | 0 | |||||
Other Liabilities | 22,997,000 | |||||
Accumulated deficit | (19,829,000) | |||||
Non-controlling interests | (16,320,000) | |||||
Total equity | (20,097,000) | |||||
Receivable from franchisees | (1,017,000) | |||||
Commissions and agency fees receivable | (630,000) | |||||
Other assets | (348,000) | |||||
Accounts payable and accrued expenses | (786,000) | |||||
Contract liabilities | 0 | |||||
Unearned revenue | (340,000) | |||||
Net cash used for operating activities | (1,475,000) | |||||
Adjustments due to Topic 606 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Employee compensation and benefits | (72,000) | |||||
Bad debt expense | (304,000) | |||||
Taxes | (499,000) | |||||
Net income (loss) | $ (3,596,000) | |||||
Basic (in dollars per share) | $ (0.08) | |||||
Diluted (in dollars per share) | $ (0.08) | |||||
Commissions and agency fees receivable, net | $ 2,142,000 | |||||
Receivable from franchisees | 9,703,000 | |||||
Deferred income taxes, net | 319,000 | |||||
Other assets | 1,314,000 | |||||
Accounts payable and accrued expenses | 117,000 | |||||
Unearned revenue | (175,000) | |||||
Contract liability | 24,085,000 | |||||
Other Liabilities | 23,000 | |||||
Accumulated deficit | (4,138,000) | |||||
Non-controlling interests | (5,954,000) | |||||
Total equity | (9,891,000) | |||||
Receivable from franchisees | 208,000 | |||||
Commissions and agency fees receivable | 2,631,000 | |||||
Other assets | (113,000) | |||||
Accounts payable and accrued expenses | (458,000) | |||||
Contract liabilities | 1,290,000 | |||||
Unearned revenue | 340,000 | |||||
Net cash used for operating activities | 0 | |||||
Commissions and agency fees | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | 11,811,000 | [1] | 16,170,000 | [2] | ||
Commissions and agency fees | Legacy GAAP | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | 14,501,000 | |||||
Commissions and agency fees | Adjustments due to Topic 606 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | (2,690,000) | |||||
Franchise revenues | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | 8,445,000 | [1] | $ 6,828,000 | [2] | ||
Franchise revenues | Legacy GAAP | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | 10,226,000 | |||||
Franchise revenues | Adjustments due to Topic 606 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Revenues | $ (1,781,000) | |||||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Revenue (Details)
Revenue (Details) | Mar. 31, 2020 |
Revenue from Contract with Customer [Abstract] | |
Amortization period | 10 years |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | |||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 20,425 | [1] | $ 23,133 | [2] |
Renewal Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 5,733 | 4,789 | ||
New Business Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,333 | 2,459 | ||
Agency Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,686 | 1,437 | ||
Contingent Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,059 | 7,485 | ||
Renewal Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 5,386 | 3,763 | ||
New Business Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2,048 | 1,355 | ||
Initial Franchise Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 978 | 1,710 | ||
Other Franchise Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 33 | |||
Interest income | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 169 | [1] | $ 135 | [2] |
Transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 10,752 | |||
Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 9,673 | |||
Franchise Channel | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 9,308 | |||
Franchise Channel | Renewal Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Franchise Channel | New Business Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Franchise Channel | Agency Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Franchise Channel | Contingent Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 694 | |||
Franchise Channel | Renewal Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 5,386 | |||
Franchise Channel | New Business Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2,048 | |||
Franchise Channel | Initial Franchise Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 978 | |||
Franchise Channel | Other Franchise Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 33 | |||
Franchise Channel | Interest income | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 169 | |||
Franchise Channel | Transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Franchise Channel | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 9,308 | |||
Corporate Channel | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 11,117 | |||
Corporate Channel | Renewal Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 5,733 | |||
Corporate Channel | New Business Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,333 | |||
Corporate Channel | Agency Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,686 | |||
Corporate Channel | Contingent Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 365 | |||
Corporate Channel | Renewal Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Corporate Channel | New Business Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Corporate Channel | Initial Franchise Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Corporate Channel | Other Franchise Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Corporate Channel | Interest income | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | |||
Corporate Channel | Transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 10,752 | |||
Corporate Channel | Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 365 | |||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Revenue - Contract Balances (De
Revenue - Contract Balances (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||||
Cost to obtain franchise contracts | $ 1,077,000 | $ 1,004,000 | ||
Increase (decrease) in cost to obtain franchise contracts | $ 73,000 | |||
Commissions and agency fees receivable, net | 4,655,000 | 6,884,000 | ||
Increase (decrease) in commissions and agency fees receivable, net | (2,229,000) | |||
Receivable from franchisees | 14,336,000 | 13,616,000 | ||
Increase (decrease) in receivables from franchisees | 720,000 | |||
Contract liability | 24,085,000 | $ 24,085,000 | $ 22,795,000 | |
Increase (decrease) in contract liability | 1,290,000 | $ 0 | ||
Contract Liability [Roll Forward] | ||||
Contract liability at beginning of period | 22,795,000 | |||
Revenue recognized during the period | (978,000) | |||
New deferrals | 2,268,000 | |||
Contract liability at end of period | $ 24,085,000 |
Franchise Fees Receivable - Bal
Franchise Fees Receivable - Balance of Franchise Fees Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Net franchise fees receivable | $ 11,976 | |||
Franchise Fees Receivable | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Franchise fees receivable | 16,097 | $ 15,314 | ||
Less: Unamortized discount | (4,052) | (3,771) | ||
Less: Allowance for uncollectible franchise fees | $ (69) | (52) | $ (494) | $ (455) |
Net franchise fees receivable | $ 11,491 |
Franchise Fees Receivable - Rol
Franchise Fees Receivable - Roll-Forward of Allowance (Details) - Franchise Fees Receivable - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 52 | $ 455 |
Charges to bad debts | 80 | 160 |
Write offs | (63) | (121) |
Ending balance | $ 69 | $ 494 |
Allowance for Uncollectible A_3
Allowance for Uncollectible Agency Fees - Roll-Forward of Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | |||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Bad debts | $ 309 | [1] | $ 401 | [2] |
Agency Fees | ||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 178 | 242 | ||
Bad debts | 228 | 241 | ||
Write offs | (225) | (245) | ||
Ending balance | $ 181 | $ 238 | ||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Property and equipment (Details
Property and equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 15,685 | $ 14,718 |
Less accumulated depreciation | (5,686) | (5,176) |
Property and equipment, net | 9,999 | 9,542 |
Furniture & fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,395 | 3,012 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,603 | 1,480 |
Network equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 324 | 268 |
Phone system | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 907 | 885 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 9,456 | $ 9,073 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 06, 2020 | Mar. 05, 2020 | |
Line of Credit | |||
Debt Instrument [Line Items] | |||
Additional commitments | $ 50,000,000 | ||
Letter of credit | $ 333,000 | ||
Remaining borrowing availability | 19,700,000 | ||
Line of Credit | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing availability | 25,000,000 | $ 13,000,000 | |
Debt issuance costs | $ 172,000 | ||
Revolver balance | 5,000,000 | ||
Secured Debt | |||
Debt Instrument [Line Items] | |||
Principal amount of debt | 37,900,000 | ||
Quarterly payments, first twelve months | 500,000 | ||
Quarterly payments, next twelve months | 1,000,000 | ||
Quarterly payments, last twelve months | 2,000,000 | ||
Term note drawn | 42,100,000 | ||
Unused borrowing capacity | $ 37,900,000 | ||
Notes Payable to Bank | |||
Debt Instrument [Line Items] | |||
Principal amount of debt | $ 40,000,000 | ||
LIBOR | Secured Debt | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2.50% |
Debt - Leverage (Details)
Debt - Leverage (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Less than 1.50 | |
Debt Instrument [Line Items] | |
Leverage ratio | 1.50 |
Greater than 1.50 | |
Debt Instrument [Line Items] | |
Leverage ratio | 1.50 |
Greater than 1.50 | LIBOR | |
Debt Instrument [Line Items] | |
Basis spread on variable rate | 2.00% |
Greater than 2.50 | |
Debt Instrument [Line Items] | |
Leverage ratio | 2.50 |
Greater than 3.50 | |
Debt Instrument [Line Items] | |
Leverage ratio | 3.50 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Note Payable (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 1,500 |
2021 | 3,500 |
2022 | 7,000 |
2023 | 30,100 |
Total | $ 42,100 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 532 | $ 447 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2020 | 2,113 | |
2021 | 2,793 | |
2022 | 2,762 | |
2023 | 2,578 | |
2024 | 2,394 | |
Thereafter | 9,231 | |
Total | $ 21,871 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) shares in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | |||
Income Tax Contingency [Line Items] | ||||
Taxes | $ (41,000) | [1] | $ 744,000 | [2] |
Effective income tax rate | 12.00% | 9.00% | ||
Uncertain tax positions | $ 0 | |||
Redemption of LLC Units (in shares) | 791 | |||
Tax Receivable Agreement | ||||
Income Tax Contingency [Line Items] | ||||
Percentage due to related parties | 85.00% | |||
Tax Receivable Agreement | Pre-IPO LLC Members | ||||
Income Tax Contingency [Line Items] | ||||
Percentage due to related parties | 85.00% | |||
Due to related parties | $ 23,000,000 | |||
Due to related parties, current | $ 681,000 | |||
LLC Units | ||||
Income Tax Contingency [Line Items] | ||||
Redemption of LLC units by Pre-IPO LLC members | 791 | |||
Redemption of LLC Units (in shares) | 791 | |||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) shares in Thousands | Mar. 31, 2020voteshares | Dec. 31, 2019shares |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock shares outstanding (in shares) | shares | 16,032 | 15,238 |
Vote per share | vote | 1 | |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Common stock shares outstanding (in shares) | shares | 20,264 | 21,055 |
Vote per share | vote | 1 |
Stockholders' Equity - Basic EP
Stockholders' Equity - Basic EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | |||
Pro forma earnings per share: | ||||
Income (loss) before taxes | $ (337) | [1] | $ 8,062 | [2] |
Less: income (loss) before taxes attributable to non-controlling interests | (140) | 4,909 | ||
Income (loss) before taxes attributable to GSHD | (197) | 3,153 | ||
Less: income tax expense (benefit) attributable to GSHD | (41) | 681 | ||
Net income (loss) attributable to GSHD | $ (156) | $ 2,472 | ||
Weighted average shares of Class A common stock outstanding - basic (in shares) | 15,564 | [1] | 14,211 | [2] |
Effect of dilutive securities (in shares) | 0 | 1,078 | ||
Weighted average shares of Class A common stock outstanding - diluted (in shares) | 15,564 | [1] | 15,289 | [2] |
Earnings per share of Class A common stock - basic (in dollars per share) | $ (0.01) | [1] | $ 0.17 | [2] |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ (0.01) | [1] | 0.16 | [2] |
Stock Option | ||||
Pro forma earnings per share: | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,840 | |||
Class A Common Stock | ||||
Pro forma earnings per share: | ||||
Earnings per share of Class A common stock - basic (in dollars per share) | $ (0.01) | 0.17 | ||
Earnings per share of Class A common stock - diluted (in dollars per share) | $ (0.01) | $ 0.16 | ||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Non-controlling interest (Detai
Non-controlling interest (Details) shares in Thousands, $ in Millions | May 01, 2018 | Mar. 31, 2020USD ($)shares | Mar. 31, 2019USD ($)shares |
Noncontrolling Interest [Line Items] | |||
Redemption of LLC Units (in shares) | 791 | ||
LLC Units | |||
Noncontrolling Interest [Line Items] | |||
Distributions | $ | $ 1.7 | $ 0.4 | |
Conversion ratio | 1 | ||
Redemption of LLC Units (in shares) | 791 | ||
Class A Common Stock | Common stock | |||
Noncontrolling Interest [Line Items] | |||
Redemption of LLC Units (in shares) | 791 | 723 | |
Class B Common Stock | Common stock | |||
Noncontrolling Interest [Line Items] | |||
Redemption of LLC Units (in shares) | 791 | (723) | |
Pre-IPO LLC Members | |||
Noncontrolling Interest [Line Items] | |||
Distributions | $ | $ 1 | $ 0.2 | |
Goosehead Insurance, Inc. | LLC Units | |||
Noncontrolling Interest [Line Items] | |||
Distributions | $ | $ 0.7 | $ 0.2 | |
Noncontrolling interest holders | |||
Noncontrolling Interest [Line Items] | |||
Ownership interest held by non-controlling interest holders | 55.80% | ||
Noncontrolling interest holders | Weighted Average | |||
Noncontrolling Interest [Line Items] | |||
Ownership interest held by non-controlling interest holders | 57.10% |
Non-controlling interest - Owne
Non-controlling interest - Ownership interests (Details) - shares shares in Thousands | Mar. 18, 2019 | Mar. 31, 2020 |
Noncontrolling Interest [Line Items] | ||
Number of LLC units outstanding (in shares) | 36,285 | 36,296 |
Noncontrolling interest, ownership percentage | 100.00% | |
Goosehead Financial, LLC | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest held by Goosehead Insurance, Inc. | 44.20% | |
Noncontrolling interest holders | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest held by non-controlling interest holders | 55.80% | |
Parent | ||
Noncontrolling Interest [Line Items] | ||
Number of LLC units outstanding (in shares) | 16,032 | |
Non-controlling interest | ||
Noncontrolling Interest [Line Items] | ||
Number of LLC units outstanding (in shares) | 20,264 |
Non-controlling interest - Effe
Non-controlling interest - Effect of changes in ownership interests on equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | |||
Noncontrolling Interest [Line Items] | ||||
Net Income (loss) attributable to Goosehead Insurance Inc. | $ (156) | [1] | $ 2,472 | [2] |
Decrease in additional paid-in capital as a result of the redemption of LLC interests | 0 | 0 | ||
Increase in additional paid-in capital as a result of activity under employee stock purchase plan | 116 | |||
Total effect of changes in ownership interest on equity attributable to Goosehead Insurance Inc. | (909) | 1,793 | ||
Parent | ||||
Noncontrolling Interest [Line Items] | ||||
Decrease in additional paid-in capital as a result of the redemption of LLC interests | (869) | (679) | ||
Increase in additional paid-in capital as a result of activity under employee stock purchase plan | $ 116 | $ 0 | ||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Equity-Based Compensation - Sch
Equity-Based Compensation - Schedule of Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 498 | $ (368) |
Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ 498 | $ 368 |
Dividends (Details)
Dividends (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Mar. 18, 2019 | Mar. 07, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | [2] | |
Dividends Payable [Line Items] | ||||||
Dividends declared | $ 15,000 | |||||
Dividends declared per share (in dollars per share) | $ 0 | [1] | $ 0.41 | |||
LLC Units held (in shares) | 36,285 | 36,296 | ||||
LLC Units | ||||||
Dividends Payable [Line Items] | ||||||
Dividends declared | $ 15,000 | |||||
Class A Common Stock | ||||||
Dividends Payable [Line Items] | ||||||
Dividends declared | $ 5,962 | |||||
Dividends declared per share (in dollars per share) | $ 0.41 | |||||
LLC Units held (in shares) | 14,421 | |||||
Class B Common Stock | ||||||
Dividends Payable [Line Items] | ||||||
Dividends declared | $ 9,038 | |||||
LLC Units held (in shares) | 21,864 | |||||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | |||||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Segment Information - Schedule
Segment Information - Schedule of Segment Information (Details) | 3 Months Ended | ||||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |||
Segment Reporting [Abstract] | |||||
Number of reportable segments | segment | 2 | ||||
Revenues: | |||||
Revenues | $ 20,425,000 | [1] | $ 23,133,000 | [2] | |
Other Income | 33,000 | 0 | |||
Interest Income | 169,000 | 135,000 | |||
Operating Expenses: | |||||
Employee compensation and benefits, excluding equity based compensation | 13,005,000 | 8,823,000 | |||
General and administrative expenses | 5,872,000 | [1] | 4,430,000 | [2] | |
Bad debts | 309,000 | [1] | 401,000 | [2] | |
Total operating expenses | 19,186,000 | 13,654,000 | |||
Adjusted EBITDA | 1,239,000 | 9,479,000 | |||
Other income | 66,000 | [1] | 0 | [2] | |
Equity based compensation | (498,000) | 368,000 | |||
Interest expense | (604,000) | [1] | (626,000) | [2] | |
Depreciation and amortization | (540,000) | [1] | (423,000) | [2] | |
Taxes | 41,000 | [1] | (744,000) | [2] | |
Net income (loss) | (296,000) | [1] | 7,318,000 | [2] | |
Total assets | 75,888,000 | 48,402,000 | $ 64,628,000 | ||
Franchise Channel | |||||
Revenues: | |||||
Revenues | 9,308,000 | ||||
Corporate Channel | |||||
Revenues: | |||||
Revenues | 11,117,000 | ||||
Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 9,308,000 | 11,178,000 | |||
Other Income | 33,000 | 0 | |||
Interest Income | 169,000 | 135,000 | |||
Operating Expenses: | |||||
Employee compensation and benefits, excluding equity based compensation | 5,896,000 | 3,755,000 | |||
General and administrative expenses | 2,225,000 | 1,632,000 | |||
Bad debts | 81,000 | 160,000 | |||
Total operating expenses | 8,202,000 | 5,547,000 | |||
Adjusted EBITDA | 1,106,000 | 5,631,000 | |||
Other income | 66,000 | ||||
Equity based compensation | 0 | 0 | |||
Interest expense | 0 | 0 | |||
Depreciation and amortization | (313,000) | (184,000) | |||
Taxes | 0 | 0 | |||
Net income (loss) | 859,000 | 5,447,000 | |||
Total assets | 23,527,000 | 16,054,000 | |||
Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 11,117,000 | 11,955,000 | |||
Other Income | 0 | 0 | |||
Interest Income | 0 | 0 | |||
Operating Expenses: | |||||
Employee compensation and benefits, excluding equity based compensation | 7,109,000 | 5,068,000 | |||
General and administrative expenses | 2,709,000 | 1,902,000 | |||
Bad debts | 228,000 | 241,000 | |||
Total operating expenses | 10,046,000 | 7,211,000 | |||
Adjusted EBITDA | 1,071,000 | 4,744,000 | |||
Other income | 0 | ||||
Equity based compensation | 0 | 0 | |||
Interest expense | 0 | 0 | |||
Depreciation and amortization | (227,000) | (239,000) | |||
Taxes | 0 | 0 | |||
Net income (loss) | 844,000 | 4,505,000 | |||
Total assets | 16,006,000 | 7,083,000 | |||
Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Other Income | 0 | 0 | |||
Interest Income | 0 | 0 | |||
Operating Expenses: | |||||
Employee compensation and benefits, excluding equity based compensation | 0 | 0 | |||
General and administrative expenses | 938,000 | 896,000 | |||
Bad debts | 0 | 0 | |||
Total operating expenses | 938,000 | 896,000 | |||
Adjusted EBITDA | (938,000) | (896,000) | |||
Other income | 0 | ||||
Equity based compensation | (498,000) | 368,000 | |||
Interest expense | (604,000) | (626,000) | |||
Depreciation and amortization | 0 | 0 | |||
Taxes | 41,000 | (744,000) | |||
Net income (loss) | (1,999,000) | (2,634,000) | |||
Total assets | 36,355,000 | 25,265,000 | |||
Renewal Commissions | |||||
Revenues: | |||||
Revenues | 5,733,000 | 4,789,000 | |||
Renewal Commissions | Franchise Channel | |||||
Revenues: | |||||
Revenues | 0 | ||||
Renewal Commissions | Corporate Channel | |||||
Revenues: | |||||
Revenues | 5,733,000 | ||||
Renewal Commissions | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Renewal Commissions | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 5,733,000 | 4,789,000 | |||
Renewal Commissions | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Agency Fees | |||||
Revenues: | |||||
Revenues | 1,686,000 | 1,437,000 | |||
Agency Fees | Franchise Channel | |||||
Revenues: | |||||
Revenues | 0 | ||||
Agency Fees | Corporate Channel | |||||
Revenues: | |||||
Revenues | 1,686,000 | ||||
Agency Fees | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Agency Fees | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 1,686,000 | 1,437,000 | |||
Agency Fees | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
New Business Commissions | |||||
Revenues: | |||||
Revenues | 3,333,000 | 2,459,000 | |||
New Business Commissions | Franchise Channel | |||||
Revenues: | |||||
Revenues | 0 | ||||
New Business Commissions | Corporate Channel | |||||
Revenues: | |||||
Revenues | 3,333,000 | ||||
New Business Commissions | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
New Business Commissions | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 3,333,000 | 2,459,000 | |||
New Business Commissions | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Contingent Commissions | |||||
Revenues: | |||||
Revenues | 1,059,000 | 7,485,000 | |||
Contingent Commissions | Franchise Channel | |||||
Revenues: | |||||
Revenues | 694,000 | ||||
Contingent Commissions | Corporate Channel | |||||
Revenues: | |||||
Revenues | 365,000 | ||||
Contingent Commissions | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 694,000 | 4,215,000 | |||
Contingent Commissions | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 365,000 | 3,270,000 | |||
Contingent Commissions | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Commissions and agency fees | |||||
Revenues: | |||||
Revenues | 11,811,000 | [1] | 16,170,000 | [2] | |
Commissions and agency fees | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 694,000 | 4,215,000 | |||
Commissions and agency fees | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 11,117,000 | 11,955,000 | |||
Commissions and agency fees | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Renewal Royalty Fees | |||||
Revenues: | |||||
Revenues | 5,386,000 | 3,763,000 | |||
Renewal Royalty Fees | Franchise Channel | |||||
Revenues: | |||||
Revenues | 5,386,000 | ||||
Renewal Royalty Fees | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | ||||
Renewal Royalty Fees | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 5,386,000 | 3,763,000 | |||
Renewal Royalty Fees | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Renewal Royalty Fees | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
New Business Royalty Fees | |||||
Revenues: | |||||
Revenues | 2,048,000 | 1,355,000 | |||
New Business Royalty Fees | Franchise Channel | |||||
Revenues: | |||||
Revenues | 2,048,000 | ||||
New Business Royalty Fees | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | ||||
New Business Royalty Fees | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 2,048,000 | 1,355,000 | |||
New Business Royalty Fees | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
New Business Royalty Fees | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Initial Franchise Fees | |||||
Revenues: | |||||
Revenues | 978,000 | 1,710,000 | |||
Initial Franchise Fees | Franchise Channel | |||||
Revenues: | |||||
Revenues | 978,000 | ||||
Initial Franchise Fees | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | ||||
Initial Franchise Fees | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 978,000 | 1,710,000 | |||
Initial Franchise Fees | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Initial Franchise Fees | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Franchise Revenues | |||||
Revenues: | |||||
Revenues | 8,445,000 | 6,828,000 | |||
Franchise Revenues | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Revenues | 8,445,000 | 6,828,000 | |||
Franchise Revenues | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Franchise Revenues | Other | |||||
Revenues: | |||||
Revenues | 0 | 0 | |||
Interest income | |||||
Revenues: | |||||
Revenues | 169,000 | [1] | 135,000 | [2] | |
Interest Income | 169,000 | 135,000 | |||
Interest income | Franchise Channel | |||||
Revenues: | |||||
Revenues | 169,000 | ||||
Interest income | Corporate Channel | |||||
Revenues: | |||||
Revenues | 0 | ||||
Interest income | Operating Segments | Franchise Channel | |||||
Revenues: | |||||
Interest Income | 169,000 | 135,000 | |||
Interest income | Operating Segments | Corporate Channel | |||||
Revenues: | |||||
Interest Income | 0 | 0 | |||
Interest income | Other | |||||
Revenues: | |||||
Interest Income | $ 0 | $ 0 | |||
[1] | The three months ended March 31, 2020 are reported under ASC 606 | ||||
[2] | The three months ended March 31, 2019 are reported under ASC 605 |
Subsequent events (Details)
Subsequent events (Details) - USD ($) | Apr. 01, 2020 | Jun. 30, 2020 | Apr. 13, 2020 | Mar. 31, 2020 |
Secured Debt | ||||
Subsequent Event [Line Items] | ||||
Principal amount of debt | $ 37,900,000 | |||
Subsequent Event | Forecast | ||||
Subsequent Event [Line Items] | ||||
Total compensation expense | $ 917,000 | |||
Subsequent Event | Secured Debt | ||||
Subsequent Event [Line Items] | ||||
Principal amount of debt | $ 80,000,000 | |||
Subsequent Event | Stock Option | ||||
Subsequent Event [Line Items] | ||||
Stock options granted (in shares) | 900,000 | |||
Exercise price (in USD per share) | $ 40.88 | |||
Grant date fair value per option (in USD per share) | $ 16.31 | |||
Award service period | 4 years |
Subsequent events - Stock Optio
Subsequent events - Stock Option Grant, Valuation Assumptions (Details) - Subsequent Event - Stock Option | Apr. 01, 2020 |
Subsequent Event [Line Items] | |
Expected volatility | 40.00% |
Expected dividend yield | 0.00% |
Expected term (in years) | 6 years 6 months |
Risk-free interest rate | 0.47% |