Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 31, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 $.01 per share | |
Trading Symbol | GSHD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001726978 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 24,449,883 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 13,415,165 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues: | ||||
Revenues | $ 71,030 | $ 57,687 | $ 198,262 | $ 151,987 |
Operating Expenses: | ||||
Employee compensation and benefits | 39,436 | 36,328 | 113,801 | 99,471 |
General and administrative expenses | 14,831 | 13,456 | 48,019 | 39,358 |
Bad debts | 797 | 2,306 | 3,352 | 4,762 |
Depreciation and amortization | 2,352 | 1,809 | 6,817 | 5,043 |
Total operating expenses | 57,416 | 53,899 | 171,989 | 148,634 |
Income from operations | 13,614 | 3,788 | 26,273 | 3,353 |
Other Income (Expense): | ||||
Interest expense | (1,617) | (1,414) | (5,057) | (3,411) |
Income (loss) before taxes | 11,997 | 2,374 | 21,216 | (58) |
Tax expense (benefit) | 724 | (666) | 2,944 | (104) |
Net income | 11,273 | 3,040 | 18,272 | 46 |
Less: net income (loss) attributable to non-controlling interests | 4,339 | 1,061 | 7,753 | (18) |
Net income attributable to Goosehead Insurance, Inc. | $ 6,934 | $ 1,979 | $ 10,519 | $ 64 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.29 | $ 0.09 | $ 0.44 | $ 0 |
Diluted (in dollars per share) | $ 0.28 | $ 0.09 | $ 0.43 | $ 0 |
Weighted average shares of Class A common stock outstanding | ||||
Basic (in shares) | 24,124 | 20,892 | 23,674 | 20,531 |
Diluted (in shares) | 24,891 | 21,569 | 24,274 | 21,430 |
Commissions and agency fees | ||||
Revenues: | ||||
Revenues | $ 31,980 | $ 27,402 | $ 88,637 | $ 73,676 |
Franchise revenues | ||||
Revenues: | ||||
Revenues | 38,729 | 29,922 | 108,490 | 77,299 |
Interest Income | ||||
Revenues: | ||||
Revenues | $ 321 | $ 363 | $ 1,135 | $ 1,012 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 35,203 | $ 28,743 |
Restricted cash | 1,858 | 1,644 |
Commissions and agency fees receivable, net | 12,327 | 14,440 |
Receivable from franchisees, net | 9,147 | 4,932 |
Prepaid expenses | 9,445 | 4,334 |
Total current assets | 67,980 | 54,093 |
Receivable from franchisees, net of current portion | 12,411 | 23,835 |
Property and equipment, net of accumulated depreciation | 31,707 | 35,347 |
Right-of-use asset | 39,846 | 44,080 |
Intangible assets, net of accumulated amortization | 14,785 | 4,487 |
Deferred income taxes, net | 170,761 | 155,318 |
Other assets | 3,967 | 4,193 |
Total assets | 341,457 | 321,353 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 14,779 | 15,958 |
Premiums payable | 1,858 | 1,644 |
Lease liability | 8,749 | 6,627 |
Contract liabilities | 4,831 | 6,031 |
Note payable | 8,750 | 6,875 |
Total current liabilities | 38,967 | 37,135 |
Lease liability, net of current portion | 59,687 | 64,947 |
Note payable, net of current portion | 70,005 | 86,711 |
Contract liabilities, net of current portion | 27,128 | 40,522 |
Liabilities under tax receivable agreement | 139,909 | 125,662 |
Total liabilities | 335,696 | 354,977 |
Additional paid in capital | 96,752 | 70,866 |
Accumulated deficit | (50,546) | (60,570) |
Total stockholders' equity | 46,584 | 10,670 |
Non-controlling interests | (40,823) | (44,294) |
Total equity | 5,761 | (33,624) |
Total liabilities and equity | 341,457 | 321,353 |
Class A Common Stock | ||
Current Liabilities: | ||
Common stock | 244 | 228 |
Class B Common Stock | ||
Current Liabilities: | ||
Common stock | $ 134 | $ 146 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Class A Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 300,000 | 300,000 |
Common stock shares issued (in shares) | 24,446 | 23,034 |
Common stock shares outstanding (in shares) | 24,446 | 23,034 |
Class B Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 50,000 | 50,000 |
Common stock shares issued (in shares) | 13,415 | 14,471 |
Common stock shares outstanding (in shares) | 13,415 | 14,471 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Class A Common Stock | Class B Common Stock | Total stockholders' equity | Common stock Class A Common Stock | Common stock Class B Common Stock | Additional paid in capital | Accumulated deficit | Non-controlling interest |
Beginning balance (in shares) at Dec. 31, 2021 | 20,198 | 16,909 | |||||||
Beginning balance at Dec. 31, 2021 | $ (69,188) | $ (14,020) | $ 200 | $ 170 | $ 46,281 | $ (60,671) | $ (55,168) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | (5,383) | (2,257) | (2,257) | (3,126) | |||||
Exercise of stock options (in shares) | 19 | ||||||||
Exercise of stock options | 256 | 256 | 256 | ||||||
Equity-based compensation | 5,788 | 5,788 | 5,788 | ||||||
Activity under employee stock purchase plan (in shares) | 3 | ||||||||
Activity under employee stock purchase plan | 214 | 214 | 214 | ||||||
Redemption of LLC Units (in shares) | 101 | 101 | |||||||
Redemption of LLC Units | 0 | (344) | $ 1 | $ (1) | (344) | 344 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 416 | 394 | 394 | 22 | |||||
Reallocation of Non-controlling interest | 0 | (478) | (478) | 478 | |||||
Ending balance (in shares) at Mar. 31, 2022 | 20,321 | 16,808 | |||||||
Ending balance at Mar. 31, 2022 | (67,897) | (10,447) | $ 201 | $ 169 | 52,589 | (63,406) | (57,450) | ||
Beginning balance (in shares) at Dec. 31, 2021 | 20,198 | 16,909 | |||||||
Beginning balance at Dec. 31, 2021 | (69,188) | (14,020) | $ 200 | $ 170 | 46,281 | (60,671) | (55,168) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 46 | ||||||||
Activity under employee stock purchase plan | 556 | ||||||||
Redemption of LLC Units | (2,300) | ||||||||
Ending balance (in shares) at Sep. 30, 2022 | 21,202 | 16,201 | |||||||
Ending balance at Sep. 30, 2022 | (45,665) | 6,329 | $ 210 | $ 163 | 67,238 | (61,282) | (51,994) | ||
Beginning balance (in shares) at Mar. 31, 2022 | 20,321 | 16,808 | |||||||
Beginning balance at Mar. 31, 2022 | (67,897) | (10,447) | $ 201 | $ 169 | 52,589 | (63,406) | (57,450) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 2,389 | 342 | 342 | 2,047 | |||||
Exercise of stock options (in shares) | 94 | ||||||||
Exercise of stock options | 1,008 | 1,008 | $ 1 | 1,007 | |||||
Equity-based compensation | 5,173 | 5,173 | 5,173 | ||||||
Activity under employee stock purchase plan (in shares) | 4 | ||||||||
Activity under employee stock purchase plan | 177 | 177 | 177 | ||||||
Redemption of LLC Units (in shares) | 115 | 115 | |||||||
Redemption of LLC Units | 0 | (377) | $ 1 | $ (1) | (377) | 377 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 403 | 373 | 373 | 30 | |||||
Reallocation of Non-controlling interest | 0 | (226) | (226) | 226 | |||||
Ending balance (in shares) at Jun. 30, 2022 | 20,534 | 16,693 | |||||||
Ending balance at Jun. 30, 2022 | (58,747) | (3,977) | $ 203 | $ 168 | 58,942 | (63,290) | (54,770) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 3,040 | 1,979 | 1,979 | 1,061 | |||||
Exercise of stock options (in shares) | 171 | ||||||||
Exercise of stock options | 3,006 | 3,006 | $ 2 | 3,004 | |||||
Equity-based compensation | 5,395 | 5,395 | 5,395 | ||||||
Activity under employee stock purchase plan (in shares) | 5 | ||||||||
Activity under employee stock purchase plan | 165 | 165 | 165 | ||||||
Redemption of LLC Units (in shares) | 492 | 492 | |||||||
Redemption of LLC Units | 0 | (1,579) | $ 5 | $ (5) | (1,579) | 1,579 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 1,476 | 1,311 | 1,311 | 165 | |||||
Reallocation of Non-controlling interest | 0 | 29 | 29 | (29) | |||||
Ending balance (in shares) at Sep. 30, 2022 | 21,202 | 16,201 | |||||||
Ending balance at Sep. 30, 2022 | (45,665) | 6,329 | $ 210 | $ 163 | 67,238 | (61,282) | (51,994) | ||
Beginning balance (in shares) at Dec. 31, 2022 | 23,034 | 14,471 | 23,034 | 14,471 | |||||
Beginning balance at Dec. 31, 2022 | (33,624) | 10,670 | $ 228 | $ 146 | 70,866 | (60,570) | (44,294) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | (181) | (81) | (81) | (100) | |||||
Exercise of stock options (in shares) | 17 | ||||||||
Exercise of stock options | 173 | 173 | 173 | ||||||
Equity-based compensation | 6,620 | 6,620 | 6,620 | ||||||
Activity under employee stock purchase plan (in shares) | 4 | ||||||||
Activity under employee stock purchase plan | 201 | 201 | 201 | ||||||
Redemption of LLC Units (in shares) | 323 | 323 | |||||||
Redemption of LLC Units | 0 | (990) | $ 3 | $ (3) | (990) | 990 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 828 | 699 | 699 | 129 | |||||
Reallocation of Non-controlling interest | 0 | (103) | (103) | 103 | |||||
Ending balance (in shares) at Mar. 31, 2023 | 23,379 | 14,147 | |||||||
Ending balance at Mar. 31, 2023 | (25,984) | 17,189 | $ 231 | $ 143 | 77,569 | (60,754) | (43,173) | ||
Beginning balance (in shares) at Dec. 31, 2022 | 23,034 | 14,471 | 23,034 | 14,471 | |||||
Beginning balance at Dec. 31, 2022 | (33,624) | 10,670 | $ 228 | $ 146 | 70,866 | (60,570) | (44,294) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 18,272 | ||||||||
Activity under employee stock purchase plan | 479 | ||||||||
Redemption of LLC Units (in shares) | 1,055 | 1,055 | |||||||
Redemption of LLC Units | (3,256) | ||||||||
Ending balance (in shares) at Sep. 30, 2023 | 24,446 | 13,415 | 24,446 | 13,415 | |||||
Ending balance at Sep. 30, 2023 | 5,761 | 46,584 | $ 244 | $ 134 | 96,752 | (50,546) | (40,823) | ||
Beginning balance (in shares) at Mar. 31, 2023 | 23,379 | 14,147 | |||||||
Beginning balance at Mar. 31, 2023 | (25,984) | 17,189 | $ 231 | $ 143 | 77,569 | (60,754) | (43,173) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 7,180 | 3,666 | 3,666 | 3,514 | |||||
Distributions | (5,206) | (5,206) | |||||||
Exercise of stock options (in shares) | 167 | ||||||||
Exercise of stock options | 3,518 | 3,518 | $ 2 | 3,516 | |||||
Equity-based compensation | 5,872 | 5,872 | 5,872 | ||||||
Activity under employee stock purchase plan (in shares) | 2 | ||||||||
Activity under employee stock purchase plan | 144 | 144 | 144 | ||||||
Redemption of LLC Units (in shares) | 352 | 352 | |||||||
Redemption of LLC Units | 0 | (1,112) | $ 4 | $ (4) | (1,112) | 1,112 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 1,027 | 870 | 870 | 157 | |||||
Reallocation of Non-controlling interest | 0 | (477) | (477) | 477 | |||||
Ending balance (in shares) at Jun. 30, 2023 | 23,900 | 13,795 | |||||||
Ending balance at Jun. 30, 2023 | (13,448) | 29,670 | $ 237 | $ 139 | 86,859 | (57,565) | (43,118) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 11,273 | 6,934 | 6,934 | 4,339 | |||||
Distributions | (3,275) | (3,275) | |||||||
Exercise of stock options (in shares) | 164 | ||||||||
Exercise of stock options | 3,366 | 3,366 | $ 2 | 3,364 | |||||
Equity-based compensation | 6,459 | 6,459 | 6,459 | ||||||
Activity under employee stock purchase plan (in shares) | 2 | ||||||||
Activity under employee stock purchase plan | 135 | 135 | 135 | ||||||
Redemption of LLC Units (in shares) | 380 | 380 | 380 | 380 | |||||
Redemption of LLC Units | 0 | (1,154) | $ 4 | $ (4) | (1,154) | 1,154 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 1,252 | 1,090 | 1,090 | 162 | |||||
Reallocation of Non-controlling interest | 0 | 85 | 85 | (85) | |||||
Ending balance (in shares) at Sep. 30, 2023 | 24,446 | 13,415 | 24,446 | 13,415 | |||||
Ending balance at Sep. 30, 2023 | $ 5,761 | $ 46,584 | $ 244 | $ 134 | $ 96,752 | $ (50,546) | $ (40,823) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 18,272 | $ 46 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,986 | 5,212 |
Impairment expense | 3,628 | 0 |
Bad debt expense | 3,352 | 4,762 |
Equity-based compensation | 18,951 | 16,356 |
Impacts of Tax Receivable Agreement | 14,665 | 11,794 |
Deferred income taxes | (12,336) | (12,274) |
Noncash lease activity | (31) | 8,857 |
Changes in operating assets and liabilities: | ||
Receivable from franchisees | 5,470 | (2,021) |
Commissions and agency fees receivable | 854 | (878) |
Prepaid expenses | (5,111) | (788) |
Other assets | 226 | (646) |
Accounts payable and accrued expenses | (2,964) | 136 |
Contract liabilities | (14,594) | 2,151 |
Premiums payable | (142) | 310 |
Net cash provided by operating activities | 37,227 | 33,017 |
Cash flows from investing activities: | ||
Proceeds from notes receivable | 34 | 32 |
Purchase of software | (4,645) | (2,094) |
Cash consideration paid for asset acquisitions | (6,043) | 0 |
Purchase of property and equipment | (3,955) | (14,771) |
Net cash used for investing activities | (14,609) | (16,833) |
Cash flows from financing activities: | ||
Repayment of note payable | (15,000) | (3,125) |
Proceeds from the issuance of Class A common stock | 7,537 | 4,832 |
Member distributions and dividends | (8,481) | 0 |
Net cash provided by (used for) financing activities | (15,944) | 1,707 |
Net increase in cash and restricted cash | 6,674 | 17,891 |
Cash and cash equivalents, and restricted cash, beginning of period | 30,387 | 30,479 |
Cash and cash equivalents, and restricted cash, end of period | 37,061 | 48,370 |
Supplemental disclosures of cash flow data: | ||
Cash paid during the period for interest | 4,849 | 3,242 |
Cash paid for income taxes | $ 608 | $ 444 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Goosehead Insurance, Inc. (“GSHD”) is the sole managing member of Goosehead Financial, LLC (“GF”) and 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 condensed 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 13 and 12 corporate-owned locations in operation at September 30, 2023 and 2022, respectively. Franchisees are provided access to Carrier Appointments, product training, technology infrastructure, client service centers and back office services. During the three months ended September 30, 2023 and 2022, the Company onboarded 30 and 144 franchise locations, respectively, and had 1,285 and 1,403 operating franchise locations as of September 30, 2023 and 2022, respectively. No franchises were purchased during the three and nine months ended September 30, 2023 and 2022. All intercompany accounts and transactions have been eliminated in consolidation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 and December 31, 2022, the condensed consolidated results of operations, stockholders' equity and statements of cash flows for the three and nine months ended September 30, 2023 and 2022. 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 for the fiscal year ended December 31, 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its revenue due to the timing of contingent commission revenue recognition and trends in housing market activity. Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. 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. Accordingly, actual results could differ from those estimates as more information becomes known. Intangible Assets Intangible assets are stated at cost less accumulated amortization and reflect amounts paid for the Company’s web domain, computer software costs, and purchased books of business (customer accounts). The web domain is amortized over a useful life of fifteen years, computer software costs are amortized over a useful life of three years, and books of business (customer accounts) are amortized over a useful life of eight years. During the three and nine months ended September 30, 2023, the Company purchased books of business (customer accounts) totaling $0.0 million and $6.5 million, respectively. Asset Impairment The Company reviews all of its identifiable assets for impairment periodically and whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. In reviewing identifiable assets, if the undiscounted future cash flows were less than the carrying amount of the respective assets, an indicator of impairment would exist, and further analysis would be required to determine whether or not a loss would need to be charged against current period earnings as a component of general and administrative expenses. Based on a review of intangible assets during the three months ended June 30, 2023, the Company identified a group of internally-developed software assets that had not been placed into service and would not be completed. As a result, the Company determined the assets had no fair value and recorded an impairment expense of $1.1 million related to the asset group. Based on a review of tangible assets during the three months ended June 30, 2023, the Company identified two office leases that will be subleased and completed a recoverability assessment for assets at those locations. Based on the results of the recoverability assessment, the Company determined that the undiscounted cash flows of the assets were below their carrying values. As a result, the Company compared the fair values of the assets to their carrying values and recorded an impairment expense of $1.4 million of property and equipment and $1.1 million of right-of-use asset for the amount the carrying values exceeded the fair values. The Company determined the fair values by estimating sublease cash flows based on market rates for similar properties and discounted them using the Company's internal borrowing rate. No additional impairment was identified during the three months ended September 30, 2023. 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 Carrier, in a fiduciary capacity. Premiums received but not yet remitted included in restricted cash were $1.9 million and $2.3 million as of September 30, 2023 and 2022, respectively. The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 (in thousands) : September 30, 2023 2022 Cash and cash equivalents $ 35,203 $ 46,107 Restricted cash 1,858 2,263 Cash and cash equivalents, and restricted cash $ 37,061 $ 48,370 Recently adopted accounting pronouncements Reference Rate Reform (ASU 2020-04) : In March 2020, the Financial Accounting Standards Board issued ASU 2020-04 Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP if certain criteria are met to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued. ASU 2020-04 is effective from March 12, 2020 through December 31, 2022. In December 2022, ASU 2022-06 extended the effective period through December 31, 2024. A substantial portion of our indebtedness bears interest at variable interest rates, primarily based on USD-LIBOR. The adoption of ASU 2020-04 did not have a material impact on our condensed consolidated financial statements. The standard will ease, if warranted, the administrative requirements for accounting for the future effects of the rate reform. Our debt agreement contains a provision to move to the Secured Overnight Financing Rate ("SOFR") if or when LIBOR is phased out. On April 26, 2023, the Company entered into an Amendment No.1 to the Second Amended and Restated Credit Agreement executing the provision to move to SOFR from LIBOR. Under the allowable expedients, a modification of a debt contract that is only a replacement of the reference rate is accounted for as a non-substantial modification. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Commissions and fees The Company earns new and renewal commissions paid by insurance carriers, royalty fees from new and renewal commissions earned by franchisees, and fees paid by clients for the identification and placement of insurance coverage. These commissions, fees and royalties are earned at a point in time upon the effective date of the insurance policy, as no performance obligation exists after coverage is bound and the unilateral enforceable right to terminate expires. The transaction price for the commissions and fees is set as the estimated amount to be received for the current policy, including the initial commission earned for the current policy term, adjusted and constrained for an estimate of changes to the commission that may arise due to (1) changes to the policy premium during the current policy term and/or (2) cancellation of the policy before the end of the current term. The Company defines the term of the policy as the contractual period the policy provides insurance coverage to the insured, which is typically 1 year. 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 Carriers, for which the Company is compensated for certain growth, profitability, or 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 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, net of a constraint. 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 amount of royalties to be received for the current policy, including the initial commission earned for the current policy term, adjusted and constrained for an estimate of changes to the commission that may arise due to (1) changes to the policy premium during the current policy term and/or (2) cancellation of the policy before the end of the current term. Revenue from royalty fees is recognized over time as the placement of the underlying policies occur. Contract costs 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 for the franchise sales team, 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 contract. 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 source (in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Type of revenue stream: Commissions and agency fees Renewal Commissions $ 19,036 $ 16,485 $ 53,395 $ 41,233 New Business Commissions 6,125 6,215 17,899 18,312 Agency Fees 2,008 2,740 6,642 8,491 Contingent Commissions 4,811 1,962 10,701 5,640 Franchise revenues Renewal Royalty Fees 30,040 21,574 80,344 54,446 New Business Royalty Fees 5,910 4,866 17,819 13,979 Initial Franchise Fees 2,430 3,056 8,780 7,943 Other Franchise Revenues 349 426 1,547 931 Interest Income 321 363 1,135 1,012 Total Revenues $ 71,030 $ 57,687 $ 198,262 $ 151,987 Timing of revenue recognition: Transferred at a point in time $ 27,169 $ 25,440 $ 77,936 $ 68,036 Transferred over time 43,861 32,247 120,326 83,951 Total Revenues $ 71,030 $ 57,687 $ 198,262 $ 151,987 Contract Balances The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands) : September 30, 2023 December 31, 2022 Increase/(decrease) Cost to obtain franchise contracts (1) $ 2,616 $ 3,255 $ (639) Commissions and agency fees receivable, net (2) 12,327 14,440 (2,113) Receivable from franchisees (2) 21,558 28,767 (7,209) Contract liabilities (2)(3) 31,959 46,553 (14,594) (1) Cost to obtain franchise contracts is included in Other assets on the condensed consolidated balance sheets. (2) Includes both the current and long term portion of this balance. (3) Initial Franchise Fees to be recognized over the life of the contract. The Company records Franchise Fees as contract liabilities on the Condensed Consolidated Balance Sheets when the agreement is executed. Contract liabilities are reduced as fees are recognized in revenue over the expected life of the franchise license. As the term of the franchise license is typically ten years, substantially all of the franchise fee revenue recognized in the period ended September 30, 2023 was included in the contract liabilities balance as of December 31, 2022. The weighted average remaining amortization period for contract liabilities related to open franchises is 7.2 years. Significant changes in contract liabilities are as follows (in thousands) : Contract liabilities at December 31, 2022 $ 46,553 Revenue recognized during the period (8,780) New deferrals (1) 3,445 Write offs (2) (9,259) Contract liabilities at September 30, 2023 $ 31,959 (1) Initial Franchise Fees where the consideration is received from the franchisee for services which are to be transferred to the Franchisee over the expected life of the Franchise Agreement. (2) Franchise Fees, net of recognized revenue, no longer deferred due to the termination of the Franchise Agreement. |
Franchise Fees Receivable
Franchise Fees Receivable | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Franchise Fees Receivable | Franchise Fees Receivable The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following (in thousands) : September 30, 2023 December 31, 2022 Franchise fees receivable (1) $ 19,861 $ 35,606 Less: Unamortized discount (1) (5,734) (9,896) Less: Allowance for uncollectible franchise fees (1) (285) (487) Net franchise fees receivable (1) $ 13,842 $ 25,223 (1) Includes both the current and long term portion of this balance. Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 2022 $ 487 Charges to bad debts 963 Write offs (1,165) Balance at September 30, 2023 $ 285 Balance at December 31, 2021 $ 303 Charges to bad debts 3,099 Write offs (2,840) Balance at September 30, 2022 $ 562 |
Allowance for Uncollectible Age
Allowance for Uncollectible Agency Fees | 9 Months Ended |
Sep. 30, 2023 | |
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, 2022 $ 450 Charges to bad debts 1,174 Write offs (1,004) Balance at September 30, 2023 $ 620 Balance at December 31, 2021 $ 489 Charges to bad debts 1,663 Write offs (1,658) Balance at September 30, 2022 $ 494 |
Property and equipment
Property and equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment Property and equipment consisted of the following (in thousands) : September 30, 2023 December 31, 2022 Furniture & fixtures $ 11,276 $ 9,772 Computer equipment 4,071 4,041 Network equipment 436 423 Phone system 326 326 Leasehold improvements 36,228 36,009 Total 52,337 50,571 Less accumulated depreciation (20,630) (15,224) Property and equipment, net $ 31,707 $ 35,347 Depreciation expense was $5.7 million and $4.5 million for nine months ended September 30, 2023 and 2022, respectively. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | 1.50x SOFR + 200 bps > 2.50x SOFR + 225 bps > 3.50x SOFR + 250 bps Maturities of the term note payable for the next five years are as follows ( in thousands ): Amount 2023 $ 1,875 2024 9,375 2025 10,000 2026 58,125 2027 — Total $ 79,375 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. As of September 30, 2023, the Company's maximum allowable trailing twelve months debt-to-EBITDA ratio, as defined by the credit agreement, was 4x. 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 September 30, 2023, the Company was in compliance with these covenants. Because of both instruments’ variable interest rate, the note payable balance at September 30, 2023 and December 31, 2022, 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." id="sjs-B4">Debt On July 21, 2021, the Company refinanced its $25.0 million revolving credit facility and $80.0 million term note payable to a $50.0 million revolving credit facility and $100.0 million term note payable in order to obtain a more favorable interest rate on the outstanding debt. 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 by an additional $25.0 million. On April 26, 2023, the Company entered into Amendment No.1 ("Amendment") of the Second Amended and Restated Credit Agreement, which provided that LIBOR should be replaced with SOFR. The $50.0 million revolving credit facility accrues interest on amounts drawn at an initial interest rate of LIBOR plus 250 basis points, then at an interest rate determined by the Company's leverage ratio for the preceding period. At September 30, 2023 the Company was accruing interest at SOFR plus 200 basis points. At September 30, 2023, the Company had nothing drawn against the revolving credit facility and had a letter of credit of $0.2 million applied against the maximum borrowing availability, payable on July 21, 2026. Thus, amounts available to draw totaled $49.8 million. The revolving credit facility is collateralized by substantially all the Company’s assets, which includes rights to future commissions and royalties. The term note is payable in quarterly installments of $0.6 million the first twelve months, $1.3 million the next twelve months, $1.9 million the next twelve months, and $2.5 million the last twenty-four months, with a balloon payment of $65.6 million on July 21, 2026. On May 31, 2023, the Company paid an additional $10.0 million toward the term note, reducing the final balloon payment to $55.6 million. The note is collateralized by substantially all of the Company’s assets, which includes rights to future commissions and royalties. Interest is calculated initially at LIBOR plus 225 basis points, then at an interest rate based on the Company's leverage ratio for the preceding period. At September 30, 2023 the Company was accruing interest at SOFR plus 200 basis points. The interest rate for each leverage ratio tier is as follows: Leverage Ratio Interest Rate < 1.50x SOFR + 175 bps > 1.50x SOFR + 200 bps > 2.50x SOFR + 225 bps > 3.50x SOFR + 250 bps Maturities of the term note payable for the next five years are as follows ( in thousands ): Amount 2023 $ 1,875 2024 9,375 2025 10,000 2026 58,125 2027 — Total $ 79,375 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. As of September 30, 2023, the Company's maximum allowable trailing twelve months debt-to-EBITDA ratio, as defined by the credit agreement, was 4x. 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 September 30, 2023, the Company was in compliance with these covenants. Because of both instruments’ variable interest rate, the note payable balance at September 30, 2023 and December 31, 2022, 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes GSHD is 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 (benefit) Provision expense (benefit) from income taxes for the three and nine months ended September 30, 2023 was $0.7 million and $2.9 million compared to $(0.7) million and $(0.1) million for the three and nine months ended September 30, 2022. The effective tax rate was 6% and 14% for the three and nine months ended September 30, 2023 and (28)% and 179% for the three and nine months ended September 30, 2022. The increase in the effective tax rate for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was primarily due to an increase in pre-tax income between periods. The decrease in the effective tax rate for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was primarily due to an increase in pre-tax income between periods from net loss to net income and an increase in taxes from a tax benefit to tax expense. Deferred taxes Deferred tax assets at September 30, 2023 were $170.8 million compared to $155.3 million at December 31, 2022. 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 nine months ended September 30, 2023. 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 and nine months ended September 30, 2023, an aggregate of 380,001 and 1,055,458 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 380,001 and 1,055,458 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 due to the Pre-IPO LLC Members, representing 85% of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the redemptions of LLC Units, after concluding it was probable that such TRA Payments would be paid based on its estimates of future taxable income. As of September 30, 2023, the total amount of TRA Payments due to the Pre-IPO LLC Members under the tax receivable agreement was $140.3 million, of which $0.4 million was current and included in Accounts payables and accrued expenses on the Condensed Consolidated Balance Sheet. Future exchanges of LLC Units for Class A common stock will result in additional TRA payments. Uncertain tax positions GSHD has determined there are no material uncertain tax positions as of September 30, 2023. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Class A Common Stock GSHD has a total of 24,446 thousand shares of its Class A common stock outstanding at September 30, 2023. 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 13,415 thousand shares of its Class B common stock outstanding at September 30, 2023. 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 and nine months ended September 30, 2023 and 2022, divided by the basic weighted average number of Class A common stock as of September 30, 2023 and 2022 (in thousands, except per share amounts) . Diluted EPS 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. Diluted EPS was computed using the treasury stock method for stock options. Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to Goosehead Insurance, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted EPS of Class B common stock under the two-class method has not been presented. Shares of the Company’s Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related LLC Units, are exchangeable into shares of Class A common stock on a one-for-one basis. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Income (loss) before taxes $ 11,997 $ 2,374 $ 21,216 $ (58) Less: income (loss) before taxes attributable to non-controlling interests 4,339 1,061 7,753 (18) Income (loss) before taxes attributable to GSHD 7,658 1,313 13,463 (40) Less: income tax expense (benefit) attributable to GSHD 724 (666) 2,944 (104) Net income attributable to GSHD $ 6,934 $ 1,979 $ 10,519 $ 64 Denominator: Weighted average shares of Class A common stock outstanding - basic 24,124 20,892 23,674 20,531 Effect of dilutive securities: Stock options (1) 767 677 601 899 Weighted average shares of Class A common stock outstanding - diluted 24,891 21,569 24,274 21,430 Earnings per share of Class A common stock - basic $ 0.29 $ 0.09 $ 0.44 $ — Earnings per share of Class A common stock - diluted $ 0.28 $ 0.09 $ 0.43 $ — (1) 1,055 and 1,800 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and nine months ended September 30, 2023 because the effect would have been anti-dilutive. 2,388 and 1,947 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and nine months ended September 30, 2022 because the effect would have been anti-dilutive. |
Non-controlling interest
Non-controlling interest | 9 Months Ended |
Sep. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Non-controlling interest | Non-controlling interest GSHD is 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. 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 and nine months ended September 30, 2023, GF made distributions of $8.7 million and $21.4 million, of which $3.3 million and $8.5 million was made to Pre-IPO LLC Members. The remaining $5.5 million and $12.9 million was made to GSHD and was 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 and nine months ended September 30, 2023, an aggregate of 380 thousand and 1,055 thousand LLC Units were redeemed by the non-controlling interest holders. Pursuant to the GF LLC Agreement, GSHD issued 380 thousand and 1,055 thousand shares of Class A common stock in connection with these redemptions and received 380 thousand and 1,055 thousand LLC Interests, increasing GSHD's ownership interest in GF. Simultaneously, and in connection with these redemptions, 380 thousand and 1,055 thousand shares of Class B common stock were surrendered and cancelled. The following table summarizes the ownership interest in GF as of September 30, 2023 (in thousands) : September 30, 2023 LLC Units Ownership % Number of LLC Units held by GSHD 24,446 64.6% Number of LLC Units held by non-controlling interest holders 13,415 35.4% Number of LLC Units outstanding 37,861 100.0% 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 percentages for the three and nine months ended September 30, 2023 were 36.1% and 37.1%, respectively. The following table summarizes the effects of changes in ownership in GF on the equity of GSHD for the three and nine months ended September 30, 2023 and 2022 as follows (in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income attributable to Goosehead Insurance, Inc. $ 6,934 $ 1,979 $ 10,519 $ 64 Transfers (to) from non-controlling interests: Decrease in additional paid-in capital as a result of the redemption of LLC interests (1,154) (1,579) (3,256) (2,300) Increase in additional paid-in capital as a result of activity under employee stock purchase plan 135 165 479 556 Total effect of changes in ownership interest on equity attributable to Goosehead Insurance, Inc. $ 5,915 $ 565 $ 7,742 $ (1,680) |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based CompensationStock option expense was $6.5 million and $19.0 million for the three and nine months ended September 30, 2023. Stock option expense was $5.4 million and $16.4 million for the three and nine months ended September 30, 2022. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation From time to time, GSHD may be involved in various legal proceedings, lawsuits and claims incidental to the conduct of the Company's business. The Company records accruals for legal contingencies to the extent that it has concluded that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. In the opinion of the Company's management, the likely results of any ongoing legal matters are not expected, either individually or in the aggregate, to have a material adverse effect on the Company's financial position, results of operations or cash flows. On November 10, 2022, a verified stockholder class action complaint for declaratory relief, captioned Mickey Dollens v. Goosehead Insurance, Inc., C.A. No. 2022-1018-JTL, was filed in the Court of Chancery of the State of Delaware (the “Dollens Action”), alleging certain corporate governance documents adopted by the Company were invalid under Delaware law. On August 8, 2023, the parties entered into a proposed settlement providing for certain non-monetary benefits to the class ( i.e., revisions to the Company's Stockholder Agreement). A hearing is set for February 16, 2024 to, among other things, consider whether to grant final approval of the proposed settlement. Additionally, the plaintiffs intends to petition the Court for attorneys’ fees and litigation expenses. While there can be no assurance regarding the ultimate outcome of the petition, the Company believes a potential loss, if any, would not be material. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
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 September 30, 2023 and December 31, 2022, the condensed consolidated results of operations, stockholders' equity and statements of cash flows for the three and nine months ended September 30, 2023 and 2022. 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 for the fiscal year ended December 31, 2022. |
Reclassification | Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. |
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. Accordingly, actual results could differ from those estimates as more information becomes known. |
Intangible Assets | Intangible AssetsIntangible assets are stated at cost less accumulated amortization and reflect amounts paid for the Company’s web domain, computer software costs, and purchased books of business (customer accounts). The web domain is amortized over a useful life of fifteen years, computer software costs are amortized over a useful life of three years, and books of business (customer accounts) are amortized over a useful life of eight years. During the three and nine months ended September 30, 2023, the Company purchased books of business (customer accounts) totaling $0.0 million and $6.5 million, respectively. |
Asset Impairment | Asset Impairment The Company reviews all of its identifiable assets for impairment periodically and whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. In reviewing identifiable assets, if the undiscounted future cash flows were less than the carrying amount of the respective assets, an indicator of impairment would exist, and further analysis would be required to determine whether or not a loss would need to be charged against current period earnings as a component of general and administrative expenses. Based on a review of intangible assets during the three months ended June 30, 2023, the Company identified a group of internally-developed software assets that had not been placed into service and would not be completed. As a result, the Company determined the assets had no fair value and recorded an impairment expense of $1.1 million related to the asset group. Based on a review of tangible assets during the three months ended June 30, 2023, the Company identified two office leases that will be subleased and completed a recoverability assessment for assets at those locations. Based on the results of the recoverability assessment, the Company determined that the undiscounted cash flows of the assets were below their carrying values. As a result, the Company compared the fair values of the assets to their carrying values and recorded an impairment expense of $1.4 million of property and equipment and $1.1 million of right-of-use asset for the amount the carrying values exceeded the fair values. The Company determined the fair values by estimating sublease cash flows based on market rates for similar properties and discounted them using the Company's internal borrowing rate. No additional impairment was identified during the three months ended September 30, 2023. |
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 Carrier, in a fiduciary capacity. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements Reference Rate Reform (ASU 2020-04) : In March 2020, the Financial Accounting Standards Board issued ASU 2020-04 Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP if certain criteria are met to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued. ASU 2020-04 is effective from March 12, 2020 through December 31, 2022. In December 2022, ASU 2022-06 extended the effective period through December 31, 2024. A substantial portion of our indebtedness bears interest at variable interest rates, primarily based on USD-LIBOR. The adoption of ASU 2020-04 did not have a material impact on our condensed consolidated financial statements. The standard will ease, if warranted, the administrative requirements for accounting for the future effects of the rate reform. Our debt agreement contains a provision to move to the Secured Overnight Financing Rate ("SOFR") if or when LIBOR is phased out. On April 26, 2023, the Company entered into an Amendment No.1 to the Second Amended and Restated Credit Agreement executing the provision to move to SOFR from LIBOR. Under the allowable expedients, a modification of a debt contract that is only a replacement of the reference rate is accounted for as a non-substantial modification. |
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) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Restrictions on Cash and Cash Equivalents | The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 (in thousands) : September 30, 2023 2022 Cash and cash equivalents $ 35,203 $ 46,107 Restricted cash 1,858 2,263 Cash and cash equivalents, and restricted cash $ 37,061 $ 48,370 |
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 statements of cash flows for the nine months ended September 30, 2023 and 2022 (in thousands) : September 30, 2023 2022 Cash and cash equivalents $ 35,203 $ 46,107 Restricted cash 1,858 2,263 Cash and cash equivalents, and restricted cash $ 37,061 $ 48,370 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table disaggregates revenue by source (in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Type of revenue stream: Commissions and agency fees Renewal Commissions $ 19,036 $ 16,485 $ 53,395 $ 41,233 New Business Commissions 6,125 6,215 17,899 18,312 Agency Fees 2,008 2,740 6,642 8,491 Contingent Commissions 4,811 1,962 10,701 5,640 Franchise revenues Renewal Royalty Fees 30,040 21,574 80,344 54,446 New Business Royalty Fees 5,910 4,866 17,819 13,979 Initial Franchise Fees 2,430 3,056 8,780 7,943 Other Franchise Revenues 349 426 1,547 931 Interest Income 321 363 1,135 1,012 Total Revenues $ 71,030 $ 57,687 $ 198,262 $ 151,987 Timing of revenue recognition: Transferred at a point in time $ 27,169 $ 25,440 $ 77,936 $ 68,036 Transferred over time 43,861 32,247 120,326 83,951 Total Revenues $ 71,030 $ 57,687 $ 198,262 $ 151,987 |
Schedule of Contract Balances | The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands) : September 30, 2023 December 31, 2022 Increase/(decrease) Cost to obtain franchise contracts (1) $ 2,616 $ 3,255 $ (639) Commissions and agency fees receivable, net (2) 12,327 14,440 (2,113) Receivable from franchisees (2) 21,558 28,767 (7,209) Contract liabilities (2)(3) 31,959 46,553 (14,594) (1) Cost to obtain franchise contracts is included in Other assets on the condensed consolidated balance sheets. (2) Includes both the current and long term portion of this balance. (3) Initial Franchise Fees to be recognized over the life of the contract. Significant changes in contract liabilities are as follows (in thousands) : Contract liabilities at December 31, 2022 $ 46,553 Revenue recognized during the period (8,780) New deferrals (1) 3,445 Write offs (2) (9,259) Contract liabilities at September 30, 2023 $ 31,959 (1) Initial Franchise Fees where the consideration is received from the franchisee for services which are to be transferred to the Franchisee over the expected life of the Franchise Agreement. (2) Franchise Fees, net of recognized revenue, no longer deferred due to the termination of the Franchise Agreement. |
Franchise Fees Receivable (Tabl
Franchise Fees Receivable (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Schedule of Franchise Fees Receivable | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following (in thousands) : September 30, 2023 December 31, 2022 Franchise fees receivable (1) $ 19,861 $ 35,606 Less: Unamortized discount (1) (5,734) (9,896) Less: Allowance for uncollectible franchise fees (1) (285) (487) Net franchise fees receivable (1) $ 13,842 $ 25,223 (1) Includes both the current and long term portion of this balance. Activity in the allowance for uncollectible agency fees was as follows (in thousands) : Balance at December 31, 2022 $ 450 Charges to bad debts 1,174 Write offs (1,004) Balance at September 30, 2023 $ 620 Balance at December 31, 2021 $ 489 Charges to bad debts 1,663 Write offs (1,658) Balance at September 30, 2022 $ 494 |
Schedule of Allowance for Uncollectible Franchise Fees | Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 2022 $ 487 Charges to bad debts 963 Write offs (1,165) Balance at September 30, 2023 $ 285 Balance at December 31, 2021 $ 303 Charges to bad debts 3,099 Write offs (2,840) Balance at September 30, 2022 $ 562 |
Allowance for Uncollectible A_2
Allowance for Uncollectible Agency Fees (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Schedule of Allowance for Uncollectible Agency Fees | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following (in thousands) : September 30, 2023 December 31, 2022 Franchise fees receivable (1) $ 19,861 $ 35,606 Less: Unamortized discount (1) (5,734) (9,896) Less: Allowance for uncollectible franchise fees (1) (285) (487) Net franchise fees receivable (1) $ 13,842 $ 25,223 (1) Includes both the current and long term portion of this balance. Activity in the allowance for uncollectible agency fees was as follows (in thousands) : Balance at December 31, 2022 $ 450 Charges to bad debts 1,174 Write offs (1,004) Balance at September 30, 2023 $ 620 Balance at December 31, 2021 $ 489 Charges to bad debts 1,663 Write offs (1,658) Balance at September 30, 2022 $ 494 |
Property and equipment (Tables)
Property and equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands) : September 30, 2023 December 31, 2022 Furniture & fixtures $ 11,276 $ 9,772 Computer equipment 4,071 4,041 Network equipment 436 423 Phone system 326 326 Leasehold improvements 36,228 36,009 Total 52,337 50,571 Less accumulated depreciation (20,630) (15,224) Property and equipment, net $ 31,707 $ 35,347 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Interest Rate Dependent of Leverage Ratio | The interest rate for each leverage ratio tier is as follows: Leverage Ratio Interest Rate < 1.50x SOFR + 175 bps > 1.50x SOFR + 200 bps > 2.50x SOFR + 225 bps > 3.50x SOFR + 250 bps |
Schedule of Maturities of Note Payable | Maturities of the term note payable for the next five years are as follows ( in thousands ): Amount 2023 $ 1,875 2024 9,375 2025 10,000 2026 58,125 2027 — Total $ 79,375 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three and nine months ended September 30, 2023 and 2022, divided by the basic weighted average number of Class A common stock as of September 30, 2023 and 2022 (in thousands, except per share amounts) . Diluted EPS 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. Diluted EPS was computed using the treasury stock method for stock options. Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to Goosehead Insurance, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted EPS of Class B common stock under the two-class method has not been presented. Shares of the Company’s Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related LLC Units, are exchangeable into shares of Class A common stock on a one-for-one basis. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Income (loss) before taxes $ 11,997 $ 2,374 $ 21,216 $ (58) Less: income (loss) before taxes attributable to non-controlling interests 4,339 1,061 7,753 (18) Income (loss) before taxes attributable to GSHD 7,658 1,313 13,463 (40) Less: income tax expense (benefit) attributable to GSHD 724 (666) 2,944 (104) Net income attributable to GSHD $ 6,934 $ 1,979 $ 10,519 $ 64 Denominator: Weighted average shares of Class A common stock outstanding - basic 24,124 20,892 23,674 20,531 Effect of dilutive securities: Stock options (1) 767 677 601 899 Weighted average shares of Class A common stock outstanding - diluted 24,891 21,569 24,274 21,430 Earnings per share of Class A common stock - basic $ 0.29 $ 0.09 $ 0.44 $ — Earnings per share of Class A common stock - diluted $ 0.28 $ 0.09 $ 0.43 $ — (1) 1,055 and 1,800 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and nine months ended September 30, 2023 because the effect would have been anti-dilutive. 2,388 and 1,947 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and nine months ended September 30, 2022 because the effect would have been anti-dilutive. |
Non-controlling interest (Table
Non-controlling interest (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Schedule of Ownership Interests | The following table summarizes the ownership interest in GF as of September 30, 2023 (in thousands) : September 30, 2023 LLC Units Ownership % Number of LLC Units held by GSHD 24,446 64.6% Number of LLC Units held by non-controlling interest holders 13,415 35.4% Number of LLC Units outstanding 37,861 100.0% |
Schedule of 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 and nine months ended September 30, 2023 and 2022 as follows (in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income attributable to Goosehead Insurance, Inc. $ 6,934 $ 1,979 $ 10,519 $ 64 Transfers (to) from non-controlling interests: Decrease in additional paid-in capital as a result of the redemption of LLC interests (1,154) (1,579) (3,256) (2,300) Increase in additional paid-in capital as a result of activity under employee stock purchase plan 135 165 479 556 Total effect of changes in ownership interest on equity attributable to Goosehead Insurance, Inc. $ 5,915 $ 565 $ 7,742 $ (1,680) |
Organization - Narrative (Detai
Organization - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 franchise location | Sep. 30, 2022 franchise location | Sep. 30, 2023 franchise location | Sep. 30, 2022 franchise location | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Corporate-owned locations (in locations) | location | 13 | 12 | 13 | 12 |
Franchise locations sold (in franchises) | 30 | 144 | ||
Operating franchise locations (in franchises) | 1,285 | 1,403 | 1,285 | 1,403 |
Franchises purchased (in franchises) | 0 | 0 | 0 | 0 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) office_lease | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortized over useful life | 8 years | 8 years | ||
Impairment expense | $ 3,628,000 | $ 0 | ||
Number of office locations | office_lease | 2 | |||
Impairment of property and equipment | $ 1,400,000 | |||
Impairment of right-of-use-asset | 1,100,000 | |||
Impairment of tangible assets | $ 0 | |||
Restricted cash | $ 1,858,000 | $ 1,858,000 | $ 2,263,000 | |
Web Domain | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortized over useful life | 15 years | 15 years | ||
Computer Software Costs | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortized over useful life | 3 years | 3 years | ||
Book of Business | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Company purchased | $ 0 | $ 6,500,000 | ||
Internally Developed Software | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Impairment expense | $ 1,100,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 35,203 | $ 28,743 | $ 46,107 | |
Restricted cash | 1,858 | 2,263 | ||
Cash and cash equivalents, and restricted cash | $ 37,061 | $ 30,387 | $ 48,370 | $ 30,479 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Insurance policy period | 1 year |
Amortization period | 10 years |
Franchise license revenue period | 10 years |
Weighted average remaining amortization period for contract liabilities | 7 years 2 months 12 days |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 71,030 | $ 57,687 | $ 198,262 | $ 151,987 |
Renewal Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 19,036 | 16,485 | 53,395 | 41,233 |
New Business Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 6,125 | 6,215 | 17,899 | 18,312 |
Agency Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2,008 | 2,740 | 6,642 | 8,491 |
Contingent Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 4,811 | 1,962 | 10,701 | 5,640 |
Renewal Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 30,040 | 21,574 | 80,344 | 54,446 |
New Business Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 5,910 | 4,866 | 17,819 | 13,979 |
Initial Franchise Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2,430 | 3,056 | 8,780 | 7,943 |
Other Franchise Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 349 | 426 | 1,547 | 931 |
Interest Income | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 321 | 363 | 1,135 | 1,012 |
Transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 27,169 | 25,440 | 77,936 | 68,036 |
Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 43,861 | $ 32,247 | $ 120,326 | $ 83,951 |
Revenue - Schedule of Contract
Revenue - Schedule of Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |||
Cost to obtain franchise contracts | $ 2,616 | $ 3,255 | |
Increase (decrease) in cost to obtain franchise contracts | (639) | ||
Commissions and agency fees receivable, net | 12,327 | 14,440 | |
Increase (decrease) in commissions and agency fees receivable, net | (2,113) | ||
Receivables from franchisees | 21,558 | 28,767 | |
Increase (decrease) in receivables from franchisees | (7,209) | ||
Contract liabilities | 31,959 | $ 46,553 | |
Increase (decrease) in contract liability | (14,594) | $ 2,151 | |
Contract Liability [Roll Forward] | |||
Contract liabilities at December 31, 2022 | 46,553 | ||
Revenue recognized during the period | (8,780) | ||
New deferrals | 3,445 | ||
Write offs | (9,259) | ||
Contract liabilities at September 30, 2023 | $ 31,959 |
Franchise Fees Receivable - Sch
Franchise Fees Receivable - Schedule of Franchise Fees Receivable (Details) - Franchise Fees Receivable - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Franchise fees receivable | $ 19,861 | $ 35,606 | ||
Less: Unamortized discount | (5,734) | (9,896) | ||
Less: Allowance for uncollectible franchise fees | (285) | (487) | $ (562) | $ (303) |
Net franchise fees receivable | $ 13,842 | $ 25,223 |
Franchise Fees Receivable - S_2
Franchise Fees Receivable - Schedule of Allowance for Uncollectible Franchise Fees (Details) - Franchise Fees Receivable - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 487 | $ 303 |
Charges to bad debts | 963 | 3,099 |
Write offs | (1,165) | (2,840) |
Ending balance | $ 285 | $ 562 |
Allowance for Uncollectible A_3
Allowance for Uncollectible Agency Fees - Schedule of Allowance for Uncollectible Agency Fees (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Charges to bad debts | $ 797 | $ 2,306 | $ 3,352 | $ 4,762 |
Agency Fees | ||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 450 | 489 | ||
Charges to bad debts | 1,174 | 1,663 | ||
Write offs | (1,004) | (1,658) | ||
Ending balance | $ 620 | $ 494 | $ 620 | $ 494 |
Property and equipment - Schedu
Property and equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||
Total | $ 52,337 | $ 50,571 | |
Less accumulated depreciation | (20,630) | (15,224) | |
Property and equipment, net | 31,707 | 35,347 | |
Depreciation | 5,700 | $ 4,500 | |
Furniture & fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Total | 11,276 | 9,772 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total | 4,071 | 4,041 | |
Network equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total | 436 | 423 | |
Phone system | |||
Property, Plant and Equipment [Line Items] | |||
Total | 326 | 326 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total | $ 36,228 | $ 36,009 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ in Millions | 9 Months Ended | |||
May 31, 2023 USD ($) | Sep. 30, 2023 USD ($) | Jul. 21, 2021 USD ($) | Jul. 20, 2021 USD ($) | |
Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Additional commitments | $ 25 | |||
Letter of credit | $ 0.2 | |||
Remaining borrowing availability | $ 49.8 | |||
Line of Credit | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing availability | 50 | $ 25 | ||
Interest Rate | 2.50% | |||
Revolver balance | $ 0 | |||
Notes Payable to Bank | ||||
Debt Instrument [Line Items] | ||||
Principal amount of debt | $ 80 | |||
Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Principal amount of debt | $ 100 | |||
EBITDA ratio | 4 | |||
Secured Debt | Debt Repayment, First Twelve Months | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | $ 0.6 | |||
Secured Debt | Debt Repayment, Next 12 Months | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | 1.3 | |||
Secured Debt | Debt Repayment, Following 12 Months | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | 1.9 | |||
Secured Debt | Debt Repayment, Last 24 Months | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | 2.5 | |||
Secured Debt | Debt Repayment, Balloon Payment | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | $ 55.6 | $ 65.6 | ||
Payment made against final balloon payment | $ 10 | |||
Secured Debt | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest Rate | 2.25% |
Debt - Schedule of Interest Rat
Debt - Schedule of Interest Rate Dependent of Leverage Ratio (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Less than 1.50 | |
Debt Instrument [Line Items] | |
Leverage Ratio | 1.50 |
Less than 1.50 | SOFR | |
Debt Instrument [Line Items] | |
Interest Rate | 1.75% |
Greater than 1.50 | |
Debt Instrument [Line Items] | |
Leverage Ratio | 1.50 |
Greater than 1.50 | SOFR | |
Debt Instrument [Line Items] | |
Interest Rate | 2% |
Greater than 2.50 | |
Debt Instrument [Line Items] | |
Leverage Ratio | 2.50 |
Greater than 2.50 | SOFR | |
Debt Instrument [Line Items] | |
Interest Rate | 2.25% |
Greater than 3.50 | |
Debt Instrument [Line Items] | |
Leverage Ratio | 3.50 |
Greater than 3.50 | SOFR | |
Debt Instrument [Line Items] | |
Interest Rate | 2.50% |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Note Payable (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 1,875 |
2024 | 9,375 |
2025 | 10,000 |
2026 | 58,125 |
2027 | 0 |
Total | $ 79,375 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Tax Contingency [Line Items] | |||||
Tax expense (benefit) | $ 724,000 | $ (666,000) | $ 2,944,000 | $ (104,000) | |
Effective income tax rate | 6% | (28.00%) | 14% | 179% | |
Deferred income taxes, net | $ 170,761,000 | $ 170,761,000 | $ 155,318,000 | ||
Uncertain tax positions | $ 0 | $ 0 | |||
LLC Units | |||||
Income Tax Contingency [Line Items] | |||||
Redemption of LLC Units (in shares) | 380,000 | 1,055,000 | |||
Pre-IPO LLC | |||||
Income Tax Contingency [Line Items] | |||||
Liabilities under the tax receivable agreement | $ 140,300,000 | $ 140,300,000 | |||
Liabilities under the tax receivable agreement, current | $ 400,000 | $ 400,000 | |||
Pre-IPO LLC | LLC Units | |||||
Income Tax Contingency [Line Items] | |||||
Redemption of LLC Units (in shares) | 380,001 | 1,055,458 | |||
Tax Receivable Agreement | |||||
Income Tax Contingency [Line Items] | |||||
Percentage due to related parties | 85% | ||||
Tax Receivable Agreement | Pre-IPO LLC | |||||
Income Tax Contingency [Line Items] | |||||
Percentage due to related parties | 85% |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) shares in Thousands | Sep. 30, 2023 vote shares | Dec. 31, 2022 shares |
Class of Stock [Line Items] | ||
Conversion ratio, Class B shares and related units | 1 | |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock shares outstanding (in shares) | shares | 24,446 | 23,034 |
Vote per share (in votes) | vote | 1 | |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Common stock shares outstanding (in shares) | shares | 13,415 | 14,471 |
Vote per share (in votes) | vote | 1 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||
Income (loss) before taxes | $ 11,997 | $ 2,374 | $ 21,216 | $ (58) |
Less: income (loss) before taxes attributable to non-controlling interests | 4,339 | 1,061 | 7,753 | (18) |
Income (loss) before taxes attributable to GSHD | 7,658 | 1,313 | 13,463 | (40) |
Less: income tax expense (benefit) attributable to GSHD | 724 | (666) | 2,944 | (104) |
Net income attributable to GSHD | $ 6,934 | $ 1,979 | $ 10,519 | $ 64 |
Weighted average shares of Class A common stock outstanding - basic (in shares) | 24,124 | 20,892 | 23,674 | 20,531 |
Effect of dilutive securities, stock options (in shares) | 767 | 677 | 601 | 899 |
Weighted average shares of Class A common stock outstanding - diluted (in shares) | 24,891 | 21,569 | 24,274 | 21,430 |
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.29 | $ 0.09 | $ 0.44 | $ 0 |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.28 | $ 0.09 | $ 0.43 | $ 0 |
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,055 | 2,388 | 1,800 | 1,947 |
Class A Common Stock | ||||
Numerator: | ||||
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.29 | $ 0.09 | $ 0.44 | $ 0 |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.28 | $ 0.09 | $ 0.43 | $ 0 |
Non-controlling interest - Narr
Non-controlling interest - Narrative (Details) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 USD ($) shares | Sep. 30, 2023 USD ($) shares | |
Noncontrolling Interest [Line Items] | ||
Distributions | $ | $ 5.5 | $ 12.9 |
Pre-IPO LLC | ||
Noncontrolling Interest [Line Items] | ||
Distributions | $ | 3.3 | 8.5 |
Goosehead Financial, LLC | ||
Noncontrolling Interest [Line Items] | ||
Distributions | $ | $ 8.7 | $ 21.4 |
Noncontrolling interest holders | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest held by non-controlling interest holders | 0.361 | 0.371 |
LLC Units | ||
Noncontrolling Interest [Line Items] | ||
Conversion ratio | 1 | |
Redemption of LLC Units (in shares) | 380 | 1,055 |
LLC Units | Noncontrolling interest holders | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 380 | 1,055 |
Class A Common Stock | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 380 | 1,055 |
Class B Common Stock | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 380 | 1,055 |
Non-controlling interest - Sche
Non-controlling interest - Schedule of Ownership interests (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2023 shares | |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 37,861 |
Noncontrolling interest, ownership percentage | 100% |
Goosehead Financial, LLC | |
Noncontrolling Interest [Line Items] | |
Ownership interest held by Goosehead Insurance, Inc. | 64.60% |
Noncontrolling interest holders | |
Noncontrolling Interest [Line Items] | |
Ownership interest held by non-controlling interest holders | 35.40% |
Parent | |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 24,446 |
Non-controlling interest | |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 13,415 |
Non-controlling interest - Sc_2
Non-controlling interest - Schedule of Effect of changes in ownership interests on equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Noncontrolling Interest [Line Items] | ||||||||
Net income attributable to Goosehead Insurance, Inc. | $ 6,934 | $ 1,979 | $ 10,519 | $ 64 | ||||
Decrease in additional paid-in capital as a result of the redemption of LLC interests | 0 | $ 0 | $ 0 | 0 | $ 0 | $ 0 | ||
Increase in additional paid-in capital as a result of activity under employee stock purchase plan | 135 | 144 | 201 | 165 | 177 | 214 | ||
Parent | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Net income attributable to Goosehead Insurance, Inc. | 6,934 | 1,979 | 10,519 | 64 | ||||
Decrease in additional paid-in capital as a result of the redemption of LLC interests | (1,154) | (1,112) | (990) | (1,579) | (377) | (344) | (3,256) | (2,300) |
Increase in additional paid-in capital as a result of activity under employee stock purchase plan | 135 | $ 144 | $ 201 | 165 | $ 177 | $ 214 | 479 | 556 |
Total effect of changes in ownership interest on equity attributable to Goosehead Insurance, Inc. | $ 5,915 | $ 565 | $ 7,742 | $ (1,680) |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 6.5 | $ 5.4 | $ 19 | $ 16.4 |