(Mark One) | |||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
☑ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Page | ||||||||
Part I | ||||||||
Item 1. | Condensed Consolidated Financial Statements (Unaudited) | |||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |||||||
Item 4. | Controls and Procedures | |||||||
Part II | ||||||||
Item 1. | Legal Proceedings | |||||||
Item 1A. | Risk Factors | |||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
Item 3. | Defaults Upon Senior Securities | |||||||
Item 4. | Mine Safety Disclosures | |||||||
Item 5. | Other Information | |||||||
Item 6. | Exhibits | |||||||
Page | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
Condensed Consolidated Statements of Stockholders' Equity | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
Notes to the Condensed Consolidated Financial Statements | ||||||||
Note 1 | Organization | |||||||
Note 2 | Summary of significant accounting policies | |||||||
Note 3 | Revenues | |||||||
Note 4 | Franchise fees receivable | |||||||
Note 5 | Allowance for uncollectible agency fees | |||||||
Note 6 | Property and equipment | |||||||
Note 7 | Debt | |||||||
Note 8 | Income taxes | |||||||
Note 9 | Stockholder's equity | |||||||
Note 10 | Non-controlling interest | |||||||
Note 11 | Equity-based compensation | |||||||
Note 12 | Litigation | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Commissions and agency fees | $ | $ | $ | $ | ||||||||||||||||||||||
Franchise revenues | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||
Employee compensation and benefits | ||||||||||||||||||||||||||
General and administrative expenses | ||||||||||||||||||||||||||
Bad debts | ||||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||
Total operating expenses | ||||||||||||||||||||||||||
Income (loss) from operations | ( | |||||||||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Income (loss) before taxes | ( | |||||||||||||||||||||||||
Tax expense | ||||||||||||||||||||||||||
Net income (loss) | ( | |||||||||||||||||||||||||
Less: net income (loss) attributable to non-controlling interests | ( | |||||||||||||||||||||||||
Net income (loss) attributable to Goosehead Insurance, Inc. | $ | $ | $ | $ | ( | |||||||||||||||||||||
Earnings per share: | ||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | ( | |||||||||||||||||||||
Diluted | $ | $ | $ | $ | ( | |||||||||||||||||||||
Weighted average shares of Class A common stock outstanding | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||
June 30, | December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
Assets | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Commissions and agency fees receivable, net | ||||||||||||||
Receivable from franchisees, net | ||||||||||||||
Prepaid expenses | ||||||||||||||
Total current assets | ||||||||||||||
Receivable from franchisees, net of current portion | ||||||||||||||
Property and equipment, net of accumulated depreciation | ||||||||||||||
Right-of-use asset | ||||||||||||||
Intangible assets, net of accumulated amortization | ||||||||||||||
Deferred income taxes, net | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||
Current Liabilities: | ||||||||||||||
Accounts payable and accrued expenses | $ | $ | ||||||||||||
Premiums payable | ||||||||||||||
Lease liability | ||||||||||||||
Contract liabilities | ||||||||||||||
Note payable | ||||||||||||||
Total current liabilities | ||||||||||||||
Lease liability, net of current portion | ||||||||||||||
Note payable, net of current portion | ||||||||||||||
Contract liabilities, net of current portion | ||||||||||||||
Liabilities under tax receivable agreement | ||||||||||||||
Total liabilities | ||||||||||||||
Class A common stock, $ | ||||||||||||||
Class B common stock, $ | ||||||||||||||
Additional paid in capital | ||||||||||||||
Accumulated deficit | ( | ( | ||||||||||||
Total stockholders' equity | ||||||||||||||
Non-controlling interests | ( | ( | ||||||||||||
Total equity | ( | ( | ||||||||||||
Total liabilities and equity | $ | $ |
Issued shares of Class A common stock | Issued shares of Class B common stock | Class A Common stock | Class B Common Stock | Additional paid in capital | Accumulated deficit | Total stockholders' equity | Non-controlling interest | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance January 1, 2023 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Activity under employee stock purchase plan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of LLC Units | ( | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax adjustments related to Tax Receivable Agreement | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reallocation of Non-controlling interest | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance March 31, 2023 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ( |
Distributions | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Activity under employee stock purchase plan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of LLC Units | ( | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax adjustments related to Tax Receivable Agreement | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reallocation of Non-controlling interest | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2023 | $ | $ | $ | $ | ( | $ | $ | ( | $ | ( |
Issued shares of Class A common stock | Issued shares of Class B common stock | Class A Common stock | Class B Common Stock | Additional paid in capital | Accumulated deficit | Total stockholders' equity | Non-controlling interest | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance January 1, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Activity under employee stock purchase plan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of LLC Units | ( | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax adjustments related to Tax Receivable Agreement | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reallocation of Non-controlling interest | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance March 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( |
Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Activity under employee stock purchase plan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of LLC Units | ( | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax adjustments related to Tax Receivable Agreement | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reallocation of Non-controlling interest | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance June 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income (loss) | $ | $ | ( | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Impairment expense | ||||||||||||||
Bad debt expense | ||||||||||||||
Equity-based compensation | ||||||||||||||
Impacts of Tax Receivable Agreement | ||||||||||||||
Deferred income taxes | ( | ( | ||||||||||||
Noncash lease activity | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Receivable from franchisees | ( | |||||||||||||
Commissions and agency fees receivable | ||||||||||||||
Prepaid expenses | ( | ( | ||||||||||||
Other assets | ( | |||||||||||||
Accounts payable and accrued expenses | ( | ( | ||||||||||||
Contract liabilities | ( | |||||||||||||
Premiums payable | ( | |||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||
Proceeds from notes receivable | ||||||||||||||
Purchase of software | ( | ( | ||||||||||||
Cash consideration paid for asset acquisitions | ( | |||||||||||||
Purchase of property and equipment | ( | ( | ||||||||||||
Net cash used for investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Repayment of note payable | ( | ( | ||||||||||||
Proceeds from the issuance of Class A common stock | ||||||||||||||
Member distributions and dividends | ( | |||||||||||||
Net cash used for financing activities | ( | ( | ||||||||||||
Net increase (decrease) in cash and restricted cash | ( | |||||||||||||
Cash and cash equivalents, and restricted cash, beginning of period | ||||||||||||||
Cash and cash equivalents, and restricted cash, end of period | $ | $ | ||||||||||||
Supplemental disclosures of cash flow data: | ||||||||||||||
Cash paid during the period for interest | $ | $ | ||||||||||||
Cash paid for income taxes |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
June 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Cash and cash equivalents, and restricted cash | $ | $ |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Type of revenue stream: | ||||||||||||||||||||||||||
Commissions and agency fees | ||||||||||||||||||||||||||
Renewal Commissions | $ | $ | $ | $ | ||||||||||||||||||||||
New Business Commissions | ||||||||||||||||||||||||||
Agency Fees | ||||||||||||||||||||||||||
Contingent Commissions | ||||||||||||||||||||||||||
Franchise revenues | ||||||||||||||||||||||||||
Renewal Royalty Fees | ||||||||||||||||||||||||||
New Business Royalty Fees | ||||||||||||||||||||||||||
Initial Franchise Fees | ||||||||||||||||||||||||||
Other Franchise Revenues | ||||||||||||||||||||||||||
Interest Income | ||||||||||||||||||||||||||
Total Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Timing of revenue recognition: | ||||||||||||||||||||||||||
Transferred at a point in time | $ | $ | $ | $ | ||||||||||||||||||||||
Transferred over time | ||||||||||||||||||||||||||
Total Revenues | $ | $ | $ | $ |
June 30, 2023 | December 31, 2022 | Increase/(decrease) | |||||||||||||||
Cost to obtain franchise contracts(1) | $ | $ | $ | ( | |||||||||||||
Commissions and agency fees receivable, net(2) | ( | ||||||||||||||||
Receivable from franchisees(2) | ( | ||||||||||||||||
Contract liabilities(2)(3) | ( |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Contract liabilities at December 31, 2022 | $ | ||||
Revenue recognized during the period | ( | ||||
New deferrals(1) | |||||
Write offs(2) | ( | ||||
Contract liabilities at June 30, 2023 | $ |
June 30, 2023 | December 31, 2022 | |||||||||||||
Franchise fees receivable(1) | $ | $ | ||||||||||||
Less: Unamortized discount(1) | ( | ( | ||||||||||||
Less: Allowance for uncollectible franchise fees(1) | ( | ( | ||||||||||||
Net franchise fees receivable(1) | $ | $ |
Balance at December 31, 2022 | $ | |||||||
Charges to bad debts | ||||||||
Write offs | ( | |||||||
Balance at June 30, 2023 | $ | |||||||
Balance at December 31, 2021 | $ | |||||||
Charges to bad debts | ||||||||
Write offs | ( | |||||||
Balance at June 30, 2022 | $ |
Balance at December 31, 2022 | $ | |||||||
Charges to bad debts | ||||||||
Write offs | ( | |||||||
Balance at June 30, 2023 | $ | |||||||
Balance at December 31, 2021 | $ | |||||||
Charges to bad debts | ||||||||
Write offs | ( | |||||||
Balance at June 30, 2022 | $ |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
June 30, 2023 | December 31, 2022 | |||||||||||||
Furniture & fixtures | $ | $ | ||||||||||||
Computer equipment | ||||||||||||||
Network equipment | ||||||||||||||
Phone system | ||||||||||||||
Leasehold improvements | ||||||||||||||
Total | ||||||||||||||
Less accumulated depreciation | ( | ( | ||||||||||||
Property and equipment, net | $ | $ |
Leverage Ratio | Interest Rate | ||||
< | SOFR + | ||||
> | SOFR + | ||||
> | SOFR + | ||||
> | SOFR + |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Amount | |||||
2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Total | $ |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||
Income (loss) before taxes | $ | $ | $ | $ | ( | |||||||||||||||||||||
Less: income (loss) before taxes attributable to non-controlling interests | ( | |||||||||||||||||||||||||
Income (loss) before taxes attributable to GSHD | ( | |||||||||||||||||||||||||
Less: income tax expense attributable to GSHD | ||||||||||||||||||||||||||
Net income (loss) attributable to GSHD | $ | $ | $ | $ | ( | |||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||
Weighted average shares of Class A common stock outstanding - basic | ||||||||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||||
Stock options(1) | ||||||||||||||||||||||||||
Weighted average shares of Class A common stock outstanding - diluted | ||||||||||||||||||||||||||
Earnings per share of Class A common stock - basic | $ | $ | $ | $ | ( | |||||||||||||||||||||
Earnings per share of Class A common stock - diluted | $ | $ | $ | $ | ( |
Goosehead Insurance, Inc. | ||
Notes to the Condensed Consolidated Financial Statements (Unaudited) |
June 30, 2023 | ||||||||
LLC Units | Ownership % | |||||||
Number of LLC Units held by GSHD | ||||||||
Number of LLC Units held by non-controlling interest holders | ||||||||
Number of LLC Units outstanding |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net income (loss) attributable to Goosehead Insurance Inc. | $ | $ | $ | $ | ( | |||||||||||||||||||||
Transfers (to) from non-controlling interests: | ||||||||||||||||||||||||||
Decrease in additional paid-in capital as a result of the redemption of LLC interests | ( | ( | ( | ( | ||||||||||||||||||||||
Increase in additional paid-in capital as a result of activity under employee stock purchase plan | ||||||||||||||||||||||||||
Total effect of changes in ownership interest on equity attributable to Goosehead Insurance Inc. | $ | $ | $ | $ | ( |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Core Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Renewal Commissions(1) | $18,541 | 27 | % | $14,541 | 27 | % | $34,359 | 27 | % | $24,748 | 26 | % | ||||||||||||||||||||||||||||||||||||||
Renewal Royalty Fees(2) | 27,552 | 40 | % | 18,870 | 36 | % | 50,304 | 40 | % | 32,872 | 35 | % | ||||||||||||||||||||||||||||||||||||||
New Business Commissions(1) | 6,257 | 9 | % | 6,730 | 13 | % | 11,774 | 9 | % | 12,097 | 13 | % | ||||||||||||||||||||||||||||||||||||||
New Business Royalty Fees(2) | 6,267 | 9 | % | 4,821 | 9 | % | 11,909 | 9 | % | 9,113 | 10 | % | ||||||||||||||||||||||||||||||||||||||
Agency Fees(1) | 2,404 | 3 | % | 3,114 | 6 | % | 4,634 | 4 | % | 5,751 | 6 | % | ||||||||||||||||||||||||||||||||||||||
Total Core Revenue | 61,021 | 88 | % | 48,076 | 91 | % | 112,980 | 89 | % | 84,581 | 90 | % | ||||||||||||||||||||||||||||||||||||||
Cost Recovery Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Initial Franchise Fees(2) | 3,287 | 5 | % | 2,591 | 5 | % | 6,350 | 5 | % | 4,887 | 5 | % | ||||||||||||||||||||||||||||||||||||||
Interest Income | 417 | 1 | % | 330 | 1 | % | 814 | 1 | % | 649 | 1 | % | ||||||||||||||||||||||||||||||||||||||
Total Cost Recovery Revenue | 3,704 | 5 | % | 2,921 | 6 | % | 7,164 | 6 | % | 5,536 | 6 | % | ||||||||||||||||||||||||||||||||||||||
Ancillary Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Contingent Commissions(1) | 3,971 | 6 | % | 1,880 | 4 | % | 5,890 | 5 | % | 3,678 | 4 | % | ||||||||||||||||||||||||||||||||||||||
Other Franchise Revenues(2) | 581 | 1 | % | 145 | — | % | 1,198 | 1 | % | 505 | 1 | % | ||||||||||||||||||||||||||||||||||||||
Total Ancillary Revenue | 4,552 | 7 | % | 2,025 | 4 | % | 7,088 | 6 | % | 4,183 | 4 | % | ||||||||||||||||||||||||||||||||||||||
Total Revenues | $69,277 | 100 | % | $53,022 | 100 | % | $127,232 | 100 | % | $94,300 | 100 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||
Commissions and agency fees | $ | 31,173 | 45 | % | $ | 26,265 | 50 | % | $ | 56,657 | 45 | % | $ | 46,274 | 49 | % | ||||||||||||||||||||||
Franchise revenues | 37,687 | 54 | % | 26,427 | 50 | % | 69,761 | 55 | % | 47,377 | 50 | % | ||||||||||||||||||||||||||
Interest income | 417 | 1 | % | 330 | 1 | % | 814 | 1 | % | 649 | 1 | % | ||||||||||||||||||||||||||
Total revenues | 69,277 | 100 | % | 53,022 | 100 | % | 127,232 | 100 | % | 94,300 | 100 | % | ||||||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||||||||||||
Employee compensation and benefits | 37,483 | 65 | % | 31,659 | 67 | % | 74,365 | 65 | % | 63,143 | 67 | % | ||||||||||||||||||||||||||
General and administrative expenses | 17,332 | 30 | % | 12,378 | 26 | % | 33,188 | 29 | % | 25,902 | 27 | % | ||||||||||||||||||||||||||
Bad debts | 900 | 2 | % | 1,660 | 4 | % | 2,555 | 2 | % | 2,456 | 3 | % | ||||||||||||||||||||||||||
Depreciation and amortization | 2,372 | 4 | % | 1,658 | 4 | % | 4,465 | 4 | % | 3,234 | 3 | % | ||||||||||||||||||||||||||
Total operating expenses | 58,087 | 100 | % | 47,355 | 100 | % | 114,573 | 100 | % | 94,735 | 100 | % | ||||||||||||||||||||||||||
Income (loss) from operations | 11,190 | 5,667 | 12,659 | (435) | ||||||||||||||||||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||||||||||||||||
Interest expense | (1,709) | (1,114) | (3,440) | (1,997) | ||||||||||||||||||||||||||||||||||
Income (loss) before taxes | 9,481 | 4,553 | 9,219 | (2,432) | ||||||||||||||||||||||||||||||||||
Tax expense | 2,301 | 2,164 | 2,220 | 562 | ||||||||||||||||||||||||||||||||||
Net income (loss) | 7,180 | 2,389 | 6,999 | (2,994) | ||||||||||||||||||||||||||||||||||
Less: net income (loss) attributable to non-controlling interests | 3,514 | 2,047 | 3,414 | (1,050) | ||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Goosehead Insurance Inc. | $ | 3,666 | $ | 342 | $ | 3,585 | $ | (1,944) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Core Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Renewal Commissions | $ | 18,541 | 59 | % | $ | 14,541 | 55 | % | $ | 34,359 | 61 | % | $ | 24,748 | 54 | % | ||||||||||||||||||||||||||||||||||
New Business Commissions | 6,257 | 20 | % | 6,730 | 26 | % | 11,774 | 21 | % | 12,097 | 26 | % | ||||||||||||||||||||||||||||||||||||||
Agency Fees | 2,404 | 8 | % | 3,114 | 12 | % | 4,634 | 8 | % | 5,751 | 12 | % | ||||||||||||||||||||||||||||||||||||||
Total Core Revenue: | 27,202 | 87 | % | 24,385 | 93 | % | 50,767 | 90 | % | 42,596 | 92 | % | ||||||||||||||||||||||||||||||||||||||
Ancillary Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Contingent Commissions | 3,971 | 13 | % | 1,880 | 7 | % | 5,890 | 10 | % | 3,678 | 8 | % | ||||||||||||||||||||||||||||||||||||||
Commissions and agency fees | $ | 31,173 | 100 | % | $ | 26,265 | 100 | % | $ | 56,657 | 100 | % | $ | 46,274 | 100 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Core Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Renewal Royalty Fees | $ | 27,552 | 73 | % | $ | 18,870 | 71 | % | $ | 50,304 | 72 | % | $ | 32,872 | 69 | % | ||||||||||||||||||||||||||||||||||
New Business Royalty Fees | 6,267 | 17 | % | 4,821 | 18 | % | 11,909 | 17 | % | 9,113 | 19 | % | ||||||||||||||||||||||||||||||||||||||
Total Core Revenues: | 33,819 | 90 | % | 23,691 | 90 | % | 62,213 | 89 | % | 41,985 | 89 | % | ||||||||||||||||||||||||||||||||||||||
Cost Recovery Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Initial Franchise Fees | 3,287 | 9 | % | 2,591 | 10 | % | 6,350 | 9 | % | 4,887 | 10 | % | ||||||||||||||||||||||||||||||||||||||
Ancillary Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other Franchise Revenues | 581 | 2 | % | 145 | 1 | % | 1,198 | 3 | % | 505 | 1 | % | ||||||||||||||||||||||||||||||||||||||
Franchise revenues | $ | 37,687 | 100 | % | $ | 26,427 | 100 | % | $ | 69,761 | 100 | % | $ | 47,377 | 100 | % |
Three Months Ended June 30, | % Change | |||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
Corporate sales Total Written Premium | $ | 179,638 | $ | 146,844 | 22 | % | ||||||||||||||
Franchise sales Total Written Premium | 587,614 | 419,117 | 40 | % | ||||||||||||||||
Total Written Premium | $ | 767,252 | $ | 565,961 | 36 | % |
Six Months Ended June 30, | % Change | |||||||||||||||||||
2023 | 2022 | |||||||||||||||||||
Corporate sales Total Written Premium | $ | 326,467 | $ | 257,239 | 27 | % | ||||||||||||||
Franchise sales Total Written Premium | 1,078,496 | 759,634 | 42 | % | ||||||||||||||||
Total Written Premium | $ | 1,404,963 | $ | 1,016,873 | 38 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Total Revenues | $ | 69,277 | $ | 53,022 | $ | 127,232 | $ | 94,300 | |||||||||||||||
Core Revenue: | |||||||||||||||||||||||
Renewal Commissions(1) | $ | 18,541 | $ | 14,541 | $ | 34,359 | $ | 24,748 | |||||||||||||||
Renewal Royalty Fees(2) | 27,552 | 18,870 | 50,304 | 32,872 | |||||||||||||||||||
New Business Commissions(1) | 6,257 | 6,730 | 11,774 | 12,097 | |||||||||||||||||||
New Business Royalty Fees(2) | 6,267 | 4,821 | 11,909 | 9,113 | |||||||||||||||||||
Agency Fees(1) | 2,404 | 3,114 | 4,634 | 5,751 | |||||||||||||||||||
Total Core Revenue | 61,021 | 48,076 | 112,980 | 84,581 | |||||||||||||||||||
Cost Recovery Revenue: | |||||||||||||||||||||||
Initial Franchise Fees(2) | 3,287 | 2,591 | 6,350 | 4,887 | |||||||||||||||||||
Interest Income | 417 | 330 | 814 | 649 | |||||||||||||||||||
Total Cost Recovery Revenue | 3,704 | 2,921 | 7,164 | 5,536 | |||||||||||||||||||
Ancillary Revenue: | |||||||||||||||||||||||
Contingent Commissions(1) | 3,971 | 1,880 | 5,890 | 3,678 | |||||||||||||||||||
Other Franchise Revenues(2) | 581 | 145 | 1,198 | 505 | |||||||||||||||||||
Total Ancillary Revenue | 4,552 | 2,025 | 7,088 | 4,183 | |||||||||||||||||||
Total Revenues | $ | 69,277 | $ | 53,022 | $ | 127,232 | $ | 94,300 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net Income (Loss) | $ | 7,180 | $ | 2,389 | $ | 6,999 | $ | (2,994) | ||||||||||||||||||
Interest expense | 1,709 | 1,114 | 3,440 | 1,997 | ||||||||||||||||||||||
Depreciation and amortization | 2,372 | 1,658 | 4,465 | 3,234 | ||||||||||||||||||||||
Tax expense | 2,301 | 2,164 | 2,220 | 562 | ||||||||||||||||||||||
Equity-based compensation | 5,872 | 5,173 | 12,492 | 10,961 | ||||||||||||||||||||||
Impairment expense | 3,628 | — | 3,628 | — | ||||||||||||||||||||||
Adjusted EBITDA | $ | 23,062 | $ | 12,498 | $ | 33,244 | $ | 13,760 | ||||||||||||||||||
Adjusted EBITDA Margin(1) | 33 | % | 24 | % | 26 | % | 15 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Earnings per share - basic (GAAP) | $ | 0.15 | $ | 0.02 | $ | 0.15 | $ | (0.10) | ||||||||||||||||||
Add: equity-based compensation(1) | 0.16 | 0.14 | 0.33 | 0.30 | ||||||||||||||||||||||
Add: impairment expense(2) | 0.10 | — | 0.10 | — | ||||||||||||||||||||||
Adjusted EPS (non-GAAP) | $ | 0.41 | $ | 0.16 | $ | 0.58 | $ | 0.20 |
Six Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
Net cash provided by operating activities | $ | 16,114 | $ | 10,092 | $ | 6,022 | |||||||||||
Net cash used for investing activities | (11,286) | (6,802) | (4,484) | ||||||||||||||
Net cash used for financing activities | (14,294) | (221) | (14,073) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | (9,466) | 3,069 | (12,535) | ||||||||||||||
Cash and cash equivalents, and restricted cash, beginning of period | 30,387 | 30,479 | (92) | ||||||||||||||
Cash and cash equivalents, and restricted cash, end of period | $ | 20,921 | $ | 33,548 | $ | (12,627) |
Contractual obligations, commitments and contingencies | ||||||||||||||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||||||||||||||
Operating leases(1) | $ | 80,528 | $ | 10,843 | $ | 23,054 | $ | 22,846 | $ | 23,785 | ||||||||||||||||||||||
Debt obligations payable(2) | 81,250 | 8,125 | 17,500 | 55,625 | — | |||||||||||||||||||||||||||
Interest expense(3) | 14,923 | 5,649 | 8,272 | 1,002 | — | |||||||||||||||||||||||||||
Liabilities under the tax receivable agreement(4) | 134,159 | 463 | 32,806 | 16,076 | 84,814 | |||||||||||||||||||||||||||
Total | $ | 310,860 | $ | 25,080 | $ | 81,632 | $ | 95,549 | $ | 108,599 |
101.INS | XBRL Instance Document | ||||
101.SCH | XBRL Schema Document | ||||
101.CAL | XBRL Calculation Linkbase Document | ||||
101.DEF | XBRL Definition Linkbase Document | ||||
101.LAB | XBRL Label Linkbase Document | ||||
101.PRE | XBRL Presentation Linkbase |
GOOSEHEAD INSURANCE, INC. | ||||||||||||||
Date: | July 26, 2023 | By: | /s/ Mark E. Jones | |||||||||||
Mark E. Jones | ||||||||||||||
Chairman and Chief Executive Officer | ||||||||||||||
(Principal Executive Officer) | ||||||||||||||
Date: | July 26, 2023 | By: | /s/ Mark E. Jones, Jr. | |||||||||||
Mark E. Jones, Jr. | ||||||||||||||
Chief Financial Officer | ||||||||||||||
(Principal Financial Officer and Principal Accounting Officer) |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
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Revenues: | ||||
Revenues | $ 69,277 | $ 53,022 | $ 127,232 | $ 94,300 |
Operating Expenses: | ||||
Employee compensation and benefits | 37,483 | 31,659 | 74,365 | 63,143 |
General and administrative expenses | 17,332 | 12,378 | 33,188 | 25,902 |
Bad debts | 900 | 1,660 | 2,555 | 2,456 |
Depreciation and amortization | 2,372 | 1,658 | 4,465 | 3,234 |
Total operating expenses | 58,087 | 47,355 | 114,573 | 94,735 |
Income (loss) from operations | 11,190 | 5,667 | 12,659 | (435) |
Other Income (Expense): | ||||
Interest expense | (1,709) | (1,114) | (3,440) | (1,997) |
Income (loss) before taxes | 9,481 | 4,553 | 9,219 | (2,432) |
Tax expense | 2,301 | 2,164 | 2,220 | 562 |
Net income (loss) | 7,180 | 2,389 | 6,999 | (2,994) |
Less: net income (loss) attributable to non-controlling interests | 3,514 | 2,047 | 3,414 | (1,050) |
Net income (loss) attributable to Goosehead Insurance, Inc. | $ 3,666 | $ 342 | $ 3,585 | $ (1,944) |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.15 | $ 0.02 | $ 0.15 | $ (0.10) |
Diluted (in dollars per share) | $ 0.15 | $ 0.02 | $ 0.15 | $ (0.10) |
Weighted average shares of Class A common stock outstanding | ||||
Basic (in shares) | 23,689 | 20,454 | 23,448 | 20,348 |
Diluted (in shares) | 24,333 | 21,245 | 23,981 | 20,348 |
Commissions and agency fees | ||||
Revenues: | ||||
Revenues | $ 31,173 | $ 26,265 | $ 56,657 | $ 46,274 |
Franchise revenues | ||||
Revenues: | ||||
Revenues | 37,687 | 26,427 | 69,761 | 47,377 |
Interest Income | ||||
Revenues: | ||||
Revenues | $ 417 | $ 330 | $ 814 | $ 649 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Thousands |
Jun. 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) | 23,900 | 23,034 |
Common stock shares outstanding (in shares) | 23,900 | 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) | 13,795 | 14,471 |
Common stock shares outstanding (in shares) | 13,795 | 14,471 |
Organization |
6 Months Ended |
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Jun. 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 12 and 15 corporate-owned locations in operation at June 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 June 30, 2023 and 2022, the Company onboarded 72 and 141 franchise locations, respectively, and had 1,344 and 1,344 operating franchise locations as of June 30, 2023 and 2022, respectively. No franchises were purchased during the three and six months ended June 30, 2023 and 2022. All intercompany accounts and transactions have been eliminated in consolidation.
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Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 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 June 30, 2023 and December 31, 2022, the condensed consolidated results of operations, stockholders' equity and statements of cash flows for the three and six months ended June 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 six months ended June 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 six months ended June 30, 2023, the Company purchased books of business (customer accounts) totaling $6.4 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 second quarter 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 second quarter 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. 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 $1.8 million and $2.4 million as of June 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 six months ended June 30, 2023 and 2022 (in thousands):
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.
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Commissions and fees The Company earns new and renewal commissions paid by Carriers and fees paid by its clients for the binding of insurance coverage. The transaction price is set as the estimated commissions to be received over the term of the policy based on an estimate of premiums placed, policy changes and cancellations, net of a constraint. 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. 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 anticipated amount of the royalties to be received over the term of the policy based on an estimate of premiums placed by the franchisee, policy changes, and cancellations, net of a constraint. 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):
Contract Balances The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands):
(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 June 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 7.5 years. Significant changes in contract liabilities are as follows (in thousands):
(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.
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Franchise Fees Receivable |
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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):
(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):
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Allowance for Uncollectible Agency Fees |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Uncollectible Agency Fees | Allowance for Uncollectible Agency FeesActivity in the allowance for uncollectible agency fees was as follows (in thousands):
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Property and equipment |
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Property and equipment | Property and equipment Property and equipment consisted of the following (in thousands):
Depreciation expense was $3.8 million and $2.9 million for six months ended June 30, 2023 and 2022, respectively.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | 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 June 30, 2023 the Company was accruing interest at SOFR plus 200 basis points. At June 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 June 30, 2023 the Company was accruing interest at SOFR plus 200 basis points. The interest rate for each leverage ratio tier is as follows:
Maturities of the term note payable for the next five years are as follows (in thousands):
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 June 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 June 30, 2023, the Company was in compliance with these covenants. Because of both instruments’ variable interest rate, the note payable balance at June 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.
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Income Taxes |
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Jun. 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 from income taxes for the three and six months ended June 30, 2023 was $2.3 million and $2.2 million compared to $2.2 million and $0.6 million for the three and six months ended June 30, 2022. The effective tax rate was 24% and 24% for the three and six months ended June 30, 2023 and 48% and (23)% for the three and six months ended June 30, 2022. The decrease in the effective tax rate for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily due to an increase in exercises of employee stock options. The increase in the effective tax rate for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily due to an increase in pre-tax income between periods. Deferred taxes Deferred tax assets at June 30, 2023 were $164.5 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 six months ended June 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 six months ended June 30, 2023, an aggregate of 351,972 and 675,457 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 351,972 and 675,457 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 June 30, 2023, the total amount of TRA Payments due to the Pre-IPO LLC Members under the tax receivable agreement was $134.2 million, of which $0.5 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 June 30, 2023.
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Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Class A Common Stock GSHD has a total of 23,900 thousand shares of its Class A common stock outstanding at June 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 13,795 thousand shares of its Class B common stock outstanding at June 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 six months ended June 30, 2023 and 2022, divided by the basic weighted average number of Class A common stock as of June 30, 2023 and 2022 (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. 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.
(1) 1,543 and 2,178 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and six months ended June 30, 2023 because the effect would have been anti-dilutive. 2,388 and 3,179 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and six months ended June 30, 2022 because the effect would have been anti-dilutive.
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Non-controlling interest |
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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 six months ended June 30, 2023, GF made a distribution of $12.6 million, of which $5.2 million was made to Pre-IPO LLC Members. The remaining $7.4 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 six months ended June 30, 2023, an aggregate of 352 thousand and 675 thousand LLC Units were redeemed by the non-controlling interest holders. Pursuant to the GF LLC Agreement, GSHD issued 352 thousand and 675 thousand shares of Class A common stock in connection with these redemptions and received 352 thousand and 675 thousand LLC Interests, increasing GSHD's ownership interest in GF. Simultaneously, and in connection with these redemptions, 352 thousand and 675 thousand shares of Class B common stock were surrendered and cancelled. The following table summarizes the ownership interest in GF as of June 30, 2023 (in thousands):
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 six months ended June 30, 2023 were 37.0% and 37.6%, respectively. The following table summarizes the effects of changes in ownership in GF on the equity of GSHD for the three and six months ended June 30, 2023 and 2022 as follows (in thousands):
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Equity-Based Compensation |
6 Months Ended |
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Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based CompensationStock option expense was $5.9 million and $12.5 million for the three and six months ended June 30, 2023. Stock option expense was $5.2 million and $11.0 million for the three and six months ended June 30, 2022. |
Litigation |
6 Months Ended |
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Jun. 30, 2023 | |
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. |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 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 June 30, 2023 and December 31, 2022, the condensed consolidated results of operations, stockholders' equity and statements of cash flows for the three and six months ended June 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 six months ended June 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.
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Reclassification | Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.
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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.
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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 six months ended June 30, 2023, the Company purchased books of business (customer accounts) totaling $6.4 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 second quarter 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 second quarter 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.
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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.
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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.
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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.
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Summary of Significant Accounting Policies (Tables) |
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Jun. 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 six months ended June 30, 2023 and 2022 (in thousands):
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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 six months ended June 30, 2023 and 2022 (in thousands):
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Revenue (Tables) |
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The following table disaggregates revenue by source (in thousands):
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Schedule of Contract Balances | The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands):
(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):
(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.
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Franchise Fees Receivable (Tables) |
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Jun. 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):
(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):
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Schedule of Allowance for Uncollectible Franchise Fees | Activity in the allowance for uncollectible franchise fees was as follows (in thousands):
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Allowance for Uncollectible Agency Fees (Tables) |
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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):
(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):
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Property and equipment (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands):
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Debt (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Rate Dependent of Leverage Ratio | The interest rate for each leverage ratio tier is as follows:
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Schedule of Maturities of Note Payable | Maturities of the term note payable for the next five years are as follows (in thousands):
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Stockholders' Equity (Tables) |
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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 six months ended June 30, 2023 and 2022, divided by the basic weighted average number of Class A common stock as of June 30, 2023 and 2022 (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. 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.
(1) 1,543 and 2,178 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and six months ended June 30, 2023 because the effect would have been anti-dilutive. 2,388 and 3,179 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and six months ended June 30, 2022 because the effect would have been anti-dilutive.
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Non-controlling interest (Tables) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Ownership Interests | The following table summarizes the ownership interest in GF as of June 30, 2023 (in thousands):
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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 six months ended June 30, 2023 and 2022 as follows (in thousands):
|
Organization - Narrative (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023
franchise
location
|
Jun. 30, 2022
franchise
location
|
Jun. 30, 2023
franchise
location
|
Jun. 30, 2022
franchise
location
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Corporate-owned locations (in locations) | location | 12 | 15 | 12 | 15 |
Franchise locations sold (in franchises) | 72 | 141 | ||
Operating franchise locations (in franchises) | 1,344 | 1,344 | 1,344 | 1,344 |
Franchises purchased (in franchises) | 0 | 0 | 0 | 0 |
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2023
USD ($)
location
|
Jun. 30, 2023
USD ($)
|
Jun. 30, 2022
USD ($)
|
|
Finite-Lived Intangible Assets [Line Items] | |||
Amortized over useful life | 8 years | 8 years | |
Impairment expense | $ 3,628 | $ 0 | |
Restricted cash | $ 1,790 | $ 1,790 | $ 2,427 |
Number of office locations | location | 2 | ||
Impairment of property and equipment | $ 1,400 | ||
Impairment of right-of-use-asset | $ 1,100 | ||
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 | $ 6,400 | $ 6,500 | |
Internally Developed Software | |||
Finite-Lived Intangible Assets [Line Items] | |||
Impairment expense | $ 1,100 |
Summary of Significant Accounting Policies - Schedule of Restricted Cash (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 19,131 | $ 28,743 | $ 31,121 | |
Restricted cash | 1,790 | 2,427 | ||
Cash and cash equivalents, and restricted cash | $ 20,921 | $ 30,387 | $ 33,548 | $ 30,479 |
Revenue - Narrative (Details) |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Amortization period | 10 years |
Franchise license revenue period | 10 years |
Weighted average remaining amortization period for contract liabilities | 7 years 6 months |
Revenue - Schedule of Contract Balances (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Revenue from Contract with Customer [Abstract] | |||
Cost to obtain franchise contracts | $ 2,904 | $ 3,255 | |
Increase (decrease) in cost to obtain franchise contracts | (351) | ||
Commissions and agency fees receivable, net | 10,459 | 14,440 | |
Increase (decrease) in commissions and agency fees receivable, net | (3,981) | ||
Receivables from franchisees | 24,935 | 28,767 | |
Increase (decrease) in receivables from franchisees | (3,832) | ||
Contract liabilities | 36,199 | $ 46,553 | |
Increase (decrease) in contract liability | (10,354) | $ 3,764 | |
Contract Liability [Roll Forward] | |||
Contract liabilities at December 31, 2022 | 46,553 | ||
Revenue recognized during the period | (6,350) | ||
New deferrals | 2,780 | ||
Write offs | (6,784) | ||
Contract liabilities at June 30, 2023 | $ 36,199 |
Franchise Fees Receivable - Schedule of Franchise Fees Receivable (Details) - Franchise Fees Receivable - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Franchise fees receivable | $ 24,324 | $ 35,606 | ||
Less: Unamortized discount | (7,067) | (9,896) | ||
Less: Allowance for uncollectible franchise fees | (421) | (487) | $ (427) | $ (303) |
Net franchise fees receivable | $ 16,836 | $ 25,223 |
Franchise Fees Receivable - Schedule of Allowance for Uncollectible Franchise Fees (Details) - Franchise Fees Receivable - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 487 | $ 303 |
Charges to bad debts | 823 | 1,341 |
Write offs | (889) | (1,217) |
Ending balance | $ 421 | $ 427 |
Allowance for Uncollectible Agency Fees - Schedule of Allowance for Uncollectible Agency Fees (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Charges to bad debts | $ 900 | $ 1,660 | $ 2,555 | $ 2,456 |
Agency Fees | ||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 450 | 489 | ||
Charges to bad debts | 876 | 1,115 | ||
Write offs | (673) | (1,052) | ||
Ending balance | $ 653 | $ 552 | $ 653 | $ 552 |
Property and equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Property, Plant and Equipment [Line Items] | |||
Total | $ 52,208 | $ 50,571 | |
Less accumulated depreciation | (19,032) | (15,224) | |
Property and equipment, net | 33,176 | 35,347 | |
Depreciation | 3,800 | $ 2,900 | |
Furniture & fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Total | 11,090 | 9,772 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total | 4,069 | 4,041 | |
Network equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total | 426 | 423 | |
Phone system | |||
Property, Plant and Equipment [Line Items] | |||
Total | 326 | 326 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total | $ 36,297 | $ 36,009 |
Debt - Schedule of Interest Rate Dependent of Leverage Ratio (Details) |
6 Months Ended |
---|---|
Jun. 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 | 2.00% |
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 of Note Payable (Details) $ in Thousands |
Jun. 30, 2023
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2023 | $ 3,750 |
2024 | 9,375 |
2025 | 10,000 |
2026 | 58,125 |
2027 | 0 |
Total | $ 81,250 |
Stockholders' Equity - Narrative (Details) shares in Thousands |
Jun. 30, 2023
vote
shares
|
Dec. 31, 2022
shares
|
---|---|---|
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock shares outstanding (in shares) | shares | 23,900 | 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 | 13,795 | 14,471 |
Vote per share (in votes) | vote | 1 |
Non-controlling interest - Narrative (Details) shares in Thousands, $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2023
USD ($)
shares
|
Jun. 30, 2023
USD ($)
shares
|
|
Noncontrolling Interest [Line Items] | ||
Distributions | $ | $ 7.4 | $ 7.4 |
Pre-IPO LLC | ||
Noncontrolling Interest [Line Items] | ||
Distributions | $ | 5.2 | 5.2 |
Goosehead Financial, LLC | ||
Noncontrolling Interest [Line Items] | ||
Distributions | $ | $ 12.6 | $ 12.6 |
Noncontrolling interest holders | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest held by non-controlling interest holders | 0.370 | 0.376 |
LLC Units | ||
Noncontrolling Interest [Line Items] | ||
Conversion ratio | 1 | |
Redemption of LLC Units (in shares) | 352 | 675 |
LLC Units | Noncontrolling interest holders | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 352 | 675 |
Class A Common Stock | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 352 | 675 |
Class B Common Stock | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 352 | 675 |
Non-controlling interest - Schedule of Ownership interests (Details) shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2023
shares
| |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 37,695 |
Noncontrolling interest, ownership percentage | 100.00% |
Goosehead Financial, LLC | |
Noncontrolling Interest [Line Items] | |
Ownership interest held by Goosehead Insurance, Inc. | 63.40% |
Noncontrolling interest holders | |
Noncontrolling Interest [Line Items] | |
Ownership interest held by non-controlling interest holders | 36.60% |
Parent | |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 23,900 |
Non-controlling interest | |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 13,795 |
Equity-Based Compensation - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 5.9 | $ 5.2 | $ 12.5 | $ 11.0 |
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