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What changed in Goosehead Insurance, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Goosehead Insurance, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+311 added−299 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-22)

Top changes in Goosehead Insurance, Inc.'s 2024 10-K

311 paragraphs added · 299 removed · 276 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

80 edited+3 added−9 removed108 unchanged
Biggest changeClients can then bind these quotes through a short call with one of our local licensed agents with expertise in the client's specific market. All client data is treated confidentially with the client's privacy and security top of mind. Goosehead does not sell or share the client's data without the client's permission.
Biggest changeAll client data is treated confidentially with the client's privacy and security top of mind. Goosehead does not sell or share the client's data without the client's permission. Our choice model, superior sales and service agents, and proprietary technology have led to 84% client retention during 2024, which we believe is among the best in our industry.
Captive Agents typically can only sell products from one Carrier. • Franchise owners and their sales agents can leverage our service centers to handle service requests and process renewals. Most traditional agencies require their agents to handle client service and renewals which diminishes the time they can devote to winning additional new business and growing their agencies.
Captive Agents typically can only sell products from one Carrier. • Franchise owners and their sales agents leverage our service centers to handle service requests and process renewals. Most traditional agencies require their agents to handle client service and renewals, which diminishes the time they can devote to winning additional new business and growing their agencies.
Major slowdowns in the various housing markets Goosehead serves could impact our ability to generate new business. Additionally, an increase in interest rates may decrease the number of home closing transactions, which could 16 negatively impact our ability to generate new business.
Major slowdowns in the various housing markets Goosehead serves could impact our ability to generate new business. 16 Additionally, an increase in interest rates may decrease the number of home closing transactions, which could negatively impact our ability to generate new business.
The SEC maintains an Internet site that contains reports, proxy and information statements and other information 19 regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only.
The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only. 19
Premiums in the personal lines insurance market have grown consistently with underlying insured values and the overall economy. 11 Personal lines products Personal lines premium trends ($billions) Source: S&P Global Market Intelligence and National Association of Insurance Commissioners Premium pricing within the P&C insurance industry has historically been cyclical, based on the underwriting capacity of the insurance industry and economic conditions.
Premiums in the personal lines insurance market have grown consistently with underlying insured values and the overall economy. 11 Personal lines products (2023) Personal lines premium trends ($billions) Source: S&P Global Market Intelligence and National Association of Insurance Commissioners Premium pricing within the P&C insurance industry has historically been cyclical, based on the underwriting capacity of the insurance industry and economic conditions.
The Royalty Fee is derived from a percentage of gross commissions on insurance policies in their initial (20%) and renewal terms (50%). Franchise owners are not entitled to an exclusive territory and may solicit sales from any location within the state in which they operate, subject to certain internal restrictions.
The Royalty Fee is derived from a percentage of gross commissions on insurance policies in their initial term (20%) and renewal terms (50%). Franchise owners are not entitled to an exclusive territory and may solicit sales from any location within the state in which they operate, subject to certain internal restrictions.
The corporate sales function also serves as fertile recruiting ground for future regional territory managers within our franchise support team. • Franchise owners benefit from lean startup costs as they do not require additional employees or a retail location to launch their agencies.
The corporate sales function also serves as fertile recruiting ground for future regional territory managers within our franchise support team. 8 • Franchise owners benefit from lean startup costs as they do not require additional employees or a retail location to launch their agencies.
Franchise sales agents are trained side-by-side with corporate sales agents to leverage our training program, to acquire product and Carrier knowledge and to utilize our technology and back office support. Our corporate sales function continues its investment in the success of our franchise sales well past initial training in 8 the form of ongoing sales coaching and mentoring.
Franchise sales agents are trained side-by-side with corporate sales agents to leverage our training program, to acquire product and Carrier knowledge, and to utilize our technology and back office support. Our corporate sales function continues its investment in the success of our franchise sales well past initial training in the form of ongoing sales coaching and mentoring.
Goosehead does not tolerate any form of discipline, reprisal, threats, intimidation, or other retaliatory conduct against an employee for making a good faith complaint of a perceived incident of discrimination or harassment or for cooperating in an investigation by the company or any federal, state, or local agency of such a complaint.
Goosehead does not tolerate any form of discipline, reprisal, threats, intimidation, or other retaliatory conduct against an 18 employee for making a good faith complaint of a perceived incident of discrimination or harassment or for cooperating in an investigation by the company or any federal, state, or local agency of such a complaint.
Goosehead maintains strong Equal Opportunity and Anti-Harassment policies, and we are committed to the principles of openness, empathy, and respect in our workplace. We contracted with a third-party solutions team to 18 encourage and facilitate independent and timely reporting and investigation of alleged policy violations.
Goosehead maintains strong Equal Opportunity and Anti-Harassment policies, and we are committed to the principles of openness, empathy, and respect in our workplace. We contracted with a third-party solutions team to encourage and facilitate independent and timely reporting and investigation of alleged policy violations.
Their primary marketing efforts are focused on establishing referral relationships with other financial services providers in their communities using our proprietary marketing strategy. We do not compensate Referral Partners for leads, but rather rely on our servicing capabilities to generate repeat business.
Their primary marketing efforts are focused on establishing referral relationships with other financial services providers in their communities using our proprietary marketing strategy. We do not compensate Referral Partners for leads, but rather they rely on our servicing capabilities to generate repeat business.
The recruiting team seeks applicants who have demonstrated a strong capacity to win new business and a desire to own their own business. Our recruiting efforts have helped us create a franchise pool which is significantly more productive than most personal lines agents.
The Franchise Development team seeks applicants who have demonstrated a strong capacity to win new business and a desire to own their own business. Our recruiting efforts have helped us create a franchise pool which is significantly more productive than most personal lines agents.
By delivering a better client experience, offering a more compelling business opportunity to agents, and driving more value to carrier partners, we have seen growth as reflected in our financial performance.
By delivering a better client experience, offering a more compelling business opportunity to agents, and driving more value to carrier partners, we have seen growth and profitability as reflected in our financial performance.
The support structure that our corporate sales agents provide to our franchise sales agents creates unique career paths in sales management, territory management, and franchise ownership. 12 • Franchise sales solves the inherent flaws in the traditional agency model .
The support structure that our corporate sales agents provide to our franchise sales agents creates unique career paths in sales management, territory management, and franchise ownership. • Franchise sales solves the inherent flaws in the traditional agency model .
This strategy allows them to spend much less on marketing and can yield dozens of high-quality clients referred directly to them, driving higher levels of productivity. All policy fulfillment and servicing is handled by our centralized service team, which retains our clients at 86%, unlocking the agent’s time to focus on new sales.
This strategy allows them to spend much less on marketing and can yield dozens of high-quality clients referred directly to them, driving higher levels of productivity. All policy fulfillment and servicing is handled by our centralized service team, which retains our clients at 84%, unlocking the agent’s time to focus on new sales.
The Digital Agent, available across the U.S., is powered by key data integrations and a proprietary database. It automatically populates information about consumers’ homes and vehicles during the quoting process and combines that information with millions of data points from two decades worth of Goosehead's expert agents’ quoting decisions and accumulated experiences.
The Digital Agent, available across the U.S., is powered by key data integrations and a proprietary database. It automatically populates information about client's homes and vehicles during the quoting process and combines that information with millions of data points from two decades worth of Goosehead's expert agents’ quoting decisions and accumulated experiences.
We've made investments in technology to outrun our competitors, and we will continue to find opportunities to utilize technology to widen the gap between us and any nascent competition. 15 Markets & marketing We primarily compete in the approximately $411 billion (according to S&P Global Market Intelligence) U.S. personal lines P&C industry.
We've made investments in technology to outrun our competitors, and we will continue to find opportunities to utilize technology to widen the gap between us and any nascent competition. 15 Markets & marketing We primarily compete in the approximately $453 billion (according to S&P Global Market Intelligence) U.S. personal lines P&C industry.
There are principally three types of businesses that sell personal lines products: • Independent agencies (39% personal lines market share in 2022 according to the Independent Insurance Agents & Brokers of America, Inc.) . Independent agencies are “independent” of any one Carrier and can offer insurance products from multiple Carriers to their clients.
There are principally three types of businesses that sell personal lines products: • Independent agencies (39% personal lines market share in 2023 according to the Independent Insurance Agents & Brokers of America, Inc.) . Independent agencies are “independent” of any one Carrier and can offer insurance products from multiple Carriers to their clients.
Franchise sales agents with more than three years of tenure averaged 1.8x in 2023 and 1.8x in 2022 as much New Business Production per Agent (Franchise) as the industry best practice. 2023 New Business Revenue per agent by tenure ($000s) Source: Internal data for 2023; Carrier provided information; Reagan Consulting 2023 Best Practices Study (using 2022 data) (1) Represents industry best practice per Reagan Consulting; does not include Unvalidated Producers; most industry agents have tenures significantly longer than 2 to 3 years.
Franchise sales agents with more than three years of tenure averaged 1.9x in 2024 and 1.8x in 2023 as much New Business Production per Agent (Franchise) as the industry best practice. 2024 New Business Revenue per agent by tenure ($000s) Source: Internal data for 2024; Carrier provided information; Reagan Consulting 2024 Best Practices Study (using 2023 data) (1) Represents industry best practice per Reagan Consulting; does not include Unvalidated Producers; most industry agents have tenures significantly longer than 2 to 3 years.
In order to grow both corporate sales and franchise sales, we must expand our agent count in corporate sales. We have a highly developed process for recruiting new agents which we have continually refined over the last decade and has resulted in higher success rates for our corporate sales agents.
In order to grow both corporate sales and franchise sales, we must expand our agent count in corporate sales. We have a highly-developed process for recruiting new agents that we have continually refined over the last decade and that has resulted in higher success rates for our corporate sales agents.
We have proven that this system delivers superior results as demonstrated by agents, who with a few years tenure, are 2.8x more productive than industry best practice according to Reagan Consulting's 2023 Best Practices Study .
We have proven that this system delivers superior results as demonstrated by agents, who with a few years tenure, are 2.8x more productive than industry best practice according to Reagan Consulting's 2024 Best Practices Study .
Jones has received a wide variety of accolades for his leadership accomplishments, including being recognized as one of the Top Rated CEOs from among more than 7,000 companies with less than 1,000 employees on Glassdoor’s “Employee’s Choice Award” in 2017. ◦ Mark Miller serves as the President and Chief Operating Officer for Goosehead. In addition, Mr.
Jones has received a wide variety of accolades for his leadership accomplishments, including being recognized as one of the Top Rated CEOs from among 13 more than 7,000 companies with less than 1,000 employees on Glassdoor’s “Employee’s Choice Award” in 2017. ◦ Mark Miller serves as the President and Chief Executive Officer for Goosehead. In addition, Mr.
We believe that we are one of the largest independent insurance agencies focused primarily on personal lines. • Captive Agencies (35% personal lines market share in 2022 according to the Independent Insurance Agents & Brokers of America, Inc.). Captive Agencies sell products for only one Carrier.
We believe that we are one of the largest independent insurance agencies focused primarily on personal lines. • Captive Agencies (35% personal lines market share in 2023 according to the Independent Insurance Agents & Brokers of America, Inc.). Captive Agencies sell products for only one Carrier.
Over the long-term, we believe these factors will enable us to avoid the shrinking workforce challenges that many of our competitors face and win an even larger market share from other agencies. According to Independent Insurance Agents & Brokers of America, Inc., 25% of independent agencies anticipate a change of control within the next five years.
Over the long-term, we believe these factors will enable us to avoid 12 the shrinking workforce challenges that many of our competitors face and win an even larger market share from other agencies. According to Independent Insurance Agents & Brokers of America, Inc., 33% of independent agencies anticipate a change of control within the next five years.
Agent perspective Among the three largest captive insurance companies, State Farm, Farmers, and Allstate, there are over 50,000 agents in the United States, and these agents face some acute pain points in their businesses.
Agent perspective Among the three largest captive insurance companies, State Farm, Farmers, and Allstate, there are over 39,000 agents in the United States, and these agents face some acute pain points in their businesses.
We are able to solve that by partnering with over 150 carriers and using technology to shop for our clients and quickly identify the Carrier who is targeting their segment of the market.
We are able to solve that by partnering with over 200 carriers and using technology to shop for our clients and quickly identify the Carrier who is targeting their segment of the market.
Compared to the 2023 Best Practices Study, corporate sales agents with more than three years of tenure averaged 2.8x as much New Business Production per Agent (Corporate) as the industry best practice.
Compared to the 2024 Best Practices Study, corporate sales agents with more than three years of tenure averaged 2.8x as much New Business Production per Agent (Corporate) as the industry best practice.
In addition to recruiting current insurance agents with a superior value proposition, we are also bringing in sales and marketing savvy professionals who are attracted to the recession-resistant and residual economics offered by a career in insurance. The value and opportunity we provide to agents has led to our rapid growth to 1,226 operating franchise locations.
In addition to recruiting current insurance agents with a superior value proposition, we are also bringing in sales and marketing savvy professionals who are attracted to the recession-resistant and residual economics offered by a career in insurance. The value and opportunity we provide to agents has led to our growth to 1,103 operating franchise locations.
Agents are encouraged to procure new clients through both relationships with Referral Partners and traditional channels (friends, family, client referrals, inbound inquiries and outbound inquiries), and we give them proprietary tools and technology to leverage our years of experience in successfully executing this go-to-market strategy. The Company represents over 150 Carriers, of which 60 provide national coverage.
Agents are encouraged to procure new clients through both relationships with Referral Partners and traditional channels (friends, family, client referrals, inbound inquiries and outbound inquiries), and we give them proprietary tools and technology to leverage our years of experience in successfully executing this go-to-market strategy. The Company represents over 200 Carriers, of which 54 provide national coverage.
We will continue to strive for a one-of-a-kind company culture and offer a competitive compensation and benefits package, which includes health insurance, a 401(k) plan, an Employee Stock Purchase Program, and the potential for option awards. As of December 31, 2023, we had approximately 1,415 full-time and no part-time employees.
We will continue to strive for a one-of-a-kind company culture and offer a competitive compensation and benefits package, which includes health insurance, a 401(k) plan, an Employee Stock Purchase Program, and the potential for option awards. As of December 31, 2024, we had approximately 1,580 full-time and no part-time employees.
There are approximately 40,000 independent insurance agencies in the United States, according to the 2022 Future One Agency Universe Case Study. Many of the largest insurance agencies, such as Aon plc, Arthur J. Gallagher & Co., Brown & Brown Inc., Marsh & McLennan Companies, Inc. and Willis Towers Watson plc, focus primarily on commercial lines.
There are approximately 39,000 independent insurance agencies in the United States, according to the 2024 Future One Agency Universe Case Study. Many of the largest insurance agencies, such as Aon plc, Arthur J. Gallagher & Co., Brown & Brown Inc., Marsh & McLennan Companies, Inc. and Willis Towers Watson plc, focus primarily on commercial lines.
As of December 31, 2023, 15% of our operating franchises had less than one year of tenure. Given the anticipated New Business productivity uplift that comes with more years of experience, and the elevated Royalty Fees on renewal business, we believe our franchise sales category is positioned for strong growth and margin expansion.
As of December 31, 2024, 8% of our operating franchises had less than one year of tenure. Given the anticipated New Business productivity uplift that comes with more years of experience, and the elevated Royalty Fees on renewal business, we believe our franchise sales category is positioned for strong growth and margin expansion.
Our 2023 average commission rate on new business premium was 14% and on renewal business premium was 13%. Commission rates can vary across Carriers, states and lines of business, and typically range from 10% to 20%. Many “insuretech” carriers saw the complexity of working with traditional agents and have sought to build models that eliminate the role of the agent.
Our 2024 average commission rate on new business premium was 14% and on renewal business premium was 12%. Commission rates can vary across Carriers, states and lines of business, and typically range from 10% to 20%. Many “insuretech” carriers saw the complexity of working with traditional agents and have sought to build models that eliminate the role of the agent.
We also generate Ancillary Revenue in the form of Contingent Commissions from Carriers related to the overall growth and loss performance of the Book of Business we have placed with them. Corporate sales is comprised of employed sales agents located in 11 sales offices across Texas, Illinois, Colorado, Ohio, Nevada, Florida, and North Carolina.
We also generate Ancillary Revenue in the form of Contingent Commissions from Carriers related to the overall growth and loss performance of the Book of Business we have placed with them. Corporate sales is comprised of employed sales agents located in 12 sales offices across Texas, Illinois, Colorado, Ohio, Florida, North Carolina, and Arizona.
As of December 31, 2023, our 10-year Total Written Premium CAGR was 44% and our 5-year premium CAGR was 42%. 10 Source: Carrier provided information Industry trends We primarily compete in the United States personal lines insurance distribution industry. Personal lines products typically include home, auto, umbrella, motorcycle, flood and recreational insurance.
As of December 31, 2024, our 10-year Total Written Premium CAGR was 42% and our 5-year Total Written Premium CAGR was 39%. 10 Source: Carrier provided information Industry trends We primarily compete in the United States personal lines insurance distribution industry. Personal lines products typically include home, auto, umbrella, motorcycle, flood and recreational insurance.
Compared to the 2022 Best Practices Study, franchise sales agents with more than three years of tenure averaged 1.8x as much New Business Production per Agent (Franchise) as the industry best practice. In franchise sales, we earn Core Revenue in the form of New Business Royalty Fees and Renewal Royalty Fees generated by the franchise location.
Compared to the 2024 Best Practices Study, franchise sales agents with more than three years of tenure averaged 1.9x as much New Business Production per Agent (Franchise) as the industry best practice. In franchise sales, we earn Core Revenue in the form of New Business Royalty Fees and Renewal Royalty Fees generated by the franchise location.
Compared to the 2023 Best Practices Study, corporate sales agents with more than three years of tenure averaged 2.8x as much New Business Production per Agent (Corporate) as the industry best practice; franchise sales agents with more than three years of tenure averaged 1.8x as much New Business Production per Agent (Franchise) as the industry best practice.
Compared to the 2024 Best Practices Study, corporate sales agents with more than three years of tenure averaged 2.8x as much New Business Production per Agent (Corporate) as the industry best practice; franchise sales agents with more than three years of tenure averaged 1.9x as much New Business Production per Agent (Franchise) as the industry best practice.
The largest Captive Agencies in the United States include Allstate Corporation, State Farm Mutual Automobile Insurance Company and Farmers Group, Inc. • Direct distribution (26% personal lines market share in 2022 according to the Independent Insurance Agents & Brokers of America, Inc.) . Certain Carriers market their products directly to clients.
The largest Captive Agencies in the United States include Allstate Corporation, State Farm Mutual Automobile Insurance Company and Farmers Group, Inc. • Direct distribution (25% personal lines market share in 2023 according to the Independent Insurance Agents & Brokers of America, Inc.) . Certain Carriers market their products directly to clients.
With as little as three data points – name, address, and date of birth – the proprietary tool arms consumers with accurate home and auto quotes from a variety of A-rated insurance companies in less than two minutes and connects them with a knowledgeable agent to complete the purchase process.
With as little as three data points—name, address, and date of birth—the proprietary tool arms clients with actionable home and auto quotes from a variety of A-rated insurance companies in less than two minutes and connects them with a knowledgeable agent to complete the purchase process.
Our consistency in service personnel is due to a combination of the opportunities for professional advancement within the Company and the competitive wages we offer; average compensation for service team employees was over $49,000 in 2023. • Continue to invest in technology to drive efficiencies in all areas of our business.
Our consistency in service personnel is due to a combination of the opportunities for professional advancement within the Company and the competitive wages we offer; average compensation for service team employees was over $51,000 in 2024. • Continue to invest in technology to drive efficiencies in all areas of our business.
Goosehead’s Digital Agent provides a best-in-class way to shop for and buy personal insurance — allowing consumers to find the right coverage at the best price. The platform provides a simple, transparent, and efficient way to get insurance quotes.
Goosehead’s Digital Agent provides a best-in-class way to shop for personal insurance — allowing clients to find the right coverage at the best price. The platform provides a simple, transparent, and efficient way to get insurance quotes.
Our technology platform has been a key enabler of our rapid growth while also driving efficiencies. One of these efficiencies is service expenses. Our 2023 and 2022 service expenses as a percentage of gross commissions were 2.5x and 2.7x lower than the industry best practice according to the 2023 Best Practices Study, which uses 2022 data.
Our technology platform has been a key enabler of our rapid growth while also driving efficiencies. One of these efficiencies is service expenses. Our 2024 and 2023 service expenses as a percentage of gross commissions were 3.2x and 2.5x lower than the industry best practice according to the 2024 Best Practices Study, which uses 2023 data.
Our 14 corporate-owned offices and 300 corporate sales agents serve as the blueprint for what is possible in the Goosehead model, and our corporate agents provide critical training and support to help the franchise agents reach their full potential.
Our 12 corporate-owned sales offices and 417 corporate sales agents serve as the blueprint for what is possible in the Goosehead model, and our corporate agents provide critical training and support to help the franchise agents reach their full potential.
As of December 31, 2023, we had corporate sales offices operating in the following locations: Westlake, Texas; Irving, Texas; Fort Worth, Texas; Houston, Texas; The Woodlands, Texas; Austin, Texas; Rosemont, Illinois; Charlotte, North Carolina; Englewood, Colorado; Orlando, Florida; and Columbus, Ohio. In 2022, Goosehead began transitioning top corporate sales agents into franchise ownership.
As of December 31, 2024, we had corporate sales offices operating in the following locations: Westlake, Texas; Coppell, Texas; Fort Worth, Texas; Houston, Texas; The Woodlands, Texas; Austin, Texas; Rosemont, Illinois; Charlotte, North Carolina; Englewood, Colorado; Orlando, Florida; Tempe, Arizona; and Columbus, Ohio. In 2022, Goosehead began transitioning top corporate sales agents into franchise ownership.
Including all producers in franchise sales 7 in 2023, New Business Production per Agency was $38 thousand for franchises with less than 1 year of tenure and $88 thousand for franchises with more than one year of tenure. Corporate sales Corporate sales consists of company-owned and financed operations with employees who are hired, trained and managed by us.
Including all producers in franchise sales in 2024, New Business Production per Agency was $80 thousand for franchises with less than 1 year of tenure and $115 thousand for franchises with more than one year of tenure. 7 Corporate sales Corporate sales consists of company-owned and financed operations with employees who are hired, trained and managed by us.
Our service centers handle all of our client service and renewals and have achieved a highly differentiated level of service as indicated by our NPS scores of 92 in 2023 and 90 in 2022.
Our service centers handle all of our client service and renewals and have achieved a highly differentiated level of service as indicated by our NPS scores of 89 in 2024 and 92 in 2023.
Compared to the 2023 Best Practices Study, which uses 2022 industry data, in 2023 and 2022, corporate sales agents with more than three years of tenure averaged 2.8x and 2.9x as much New Business Production per Agent, respectively, as the industry best practice.
Compared to the 2024 Best Practices Study, which uses 2023 industry data, our corporate sales agents with more than three years of tenure averaged 2.8x as much New Business Production per Agent in both 2024 and 2023 as the industry best practice.
Our high degree of client satisfaction drove our 86% Client Retention rate during 2023, which we believe to be among the highest in the industry. Our retention rate is even stronger on a premium basis. In 2023, we retained 101% of the premiums we distributed in 2022.
Our high degree of client satisfaction drove our 84% Client Retention rate during 2024, which we believe to be among the highest in the industry. Our retention rate is even stronger on a premium basis. In 2024, we retained 98% of the premiums we distributed in 2023.
Total Written Premium, which we believe is the best leading indicator of future revenue growth because it drives our future Core Revenue and gives us potential opportunities to earn Ancillary Revenue in the form of Contingent Commissions, grew 34% to $3.0 billion from $2.2 billion in 2022.
Total Written Premium, which we believe is the best leading indicator of future revenue growth because it drives our future Core Revenue and gives us potential opportunities to earn Ancillary Revenue in the form of Contingent Commissions, grew 29% to $3.8 billion in 2024, up from $3.0 billion in 2023.
Importantly, our integrated solution allows us to pivot quickly and upgrade our technology offering without a large financial investment. We believe our single, sales-oriented technology platform is differentiated relative to most insurance agency IT environments that utilize disparate accounting-driven agency management vendors and legacy mainframe systems across their operations.
Importantly, our integrated solution allows us to pivot quickly and upgrade our technology offering as market dynamics change. We believe our single, sales-oriented technology platform is differentiated relative to most insurance agency IT environments that utilize disparate accounting-driven agency management vendors and legacy mainframe systems across their operations.
Cost Recovery Revenue consists of non-refundable Initial Franchise Fees, which compensate us for the training and onboarding efforts to launch a new franchise location, and Interest Income related to Franchisees that elect the payment plan option for their Initial Franchise Fee. Ancillary Revenue consists of Contingent Commissions and Other Income. We started franchising in 2012 and have since expanded rapidly.
Cost Recovery Revenue consists of non-refundable Initial Franchise Fees, which compensate us for the training and onboarding efforts to launch a new franchise location, and Interest Income related to Franchisees that elect the payment plan option for their Initial Franchise Fee. We started franchising in 2012 and have since expanded rapidly. Premiums in franchise sales grew 33% during 2024.
Each of our service agents can service, on average, a Book of Business that it would take a productive sales agent years to generate. • Proven and experienced senior management team . ◦ Our Chairman and Chief Executive Officer, Mark E. Jones, co-founded Goosehead in 2003. Prior to co-founding Goosehead, Mr.
Each of our service agents can service, on average, a Book of Business that would take a productive sales agent years to generate. • Proven and experienced senior management team . ◦ Our Executive Chairman, Mark E. Jones, co-founded Goosehead in 2003. Prior to his appointment as Executive Chairman in July 2024, Mr.
Our service agents are also focused on selling additional insurance coverages to clients, which result in additional New Business Revenue. Our four separate service centers provide us with the ability to cover the U.S. time zones more broadly, and the ability to better manage business continuity risks.
Our service agents are also focused on selling additional insurance coverages to clients, which result in additional New Business Revenue. Our centralized service team spread across five service centers provides us with the ability to cover the U.S. time zones more broadly, and the ability to better manage business continuity risks.
During 2023, two carriers represented more than 10% of total revenue at 16% and 12%. Franchise agreements Franchise sales operates under a franchising model and each franchise is governed by a Franchise Agreement. The Franchise Agreements for all existing franchises are substantially similar.
During 2024, three carriers represented more than 10% of total revenue at 19%, 15%, and 10%. Franchise agreements Franchise sales operates under a franchising model and each franchise is governed by a Franchise Agreement. The Franchise Agreements for all existing franchises are substantially similar.
A number of firms and banks with substantially greater resources and market presence compete with us. Our brokerage operations compete with firms that operate globally or nationally or are strong in a particular region or locality, and may have in that region or locality an office with revenues as large as or larger than those of our corresponding local office.
Our brokerage operations compete with firms that operate globally or nationally or are strong in a particular region or locality, and may have in that region or locality an office with revenues as large as or larger than those of our corresponding local office.
As of December 31, 2023, we have signed Franchise Agreements in 46 states covering over 99% of the total US population. We expect to continue growing our market share within these states as we sign and launch new franchises, and as those franchises ramp up their new business production over the course of 2-3 years.
As of December 31, 2024, we have operating franchises in 44 states covering over 98% of the total US population. We expect to continue growing our market share within these states as we sign and launch new franchises, and as those franchises ramp up their new business production over the course of 2-3 years.
Our Client Retention effort is led by our service centers, which had a 2023 NPS score of 92, leading to an 86% Client Retention rate and 101% premium retention rate in 2023. Key to maintaining these NPS scores and Client Retention rates is the consistency of personnel in our service centers.
Our Client Retention effort is led by our service centers, which had a 2024 NPS score of 89, leading to an 84% Client Retention rate and 98% premium retention rate in 2024. The key to maintaining these NPS scores and Client Retention rates is the consistency of personnel in our service centers.
Additionally, in contrast to the traditional insurance agency model, we separate the sales function from the service function, thus enabling agents to focus on selling, and service personnel to focus on delivering superior client service. This model has helped drive best-in-class net promoter scores for client service, nearly 2.6x the 2022 P&C industry average according to Statista.
Additionally, in contrast to the traditional insurance agency model, we separate the sales function from the service function, thus enabling agents to focus on selling, and service personnel to focus on delivering superior client service. This model has helped drive best-in-class net promoter scores for client service, 4.0x the 2024 P&C industry average according to Qualtrics XM Institute.
In 2023, New Business Production per Agent in corporate sales was $73 thousand for agents with less than 1 year of tenure and $118 thousand for agents with more than one year of tenure.
In 2024, New Business Production per Agent in corporate sales was $66 thousand for agents with less than 1 year of tenure and $115 thousand for agents with more than one year of tenure.
The combination of expanding total producer count, leveraging technology and maintaining our commitment to service led to revenue growth of 25% and Total Written Premium growth of 34% in 2023.
The combination of expanding total producer count, leveraging technology, and maintaining our commitment to service led to revenue growth of 20% and Total Written Premium growth of 29% in 2024.
Goosehead offers its employees a competitive health benefits package, including medical, dental, and vision insurance, as well as flex and health savings accounts, life insurance, short-term disability insurance, long-term disability insurance, accident insurance, critical illness insurance, and the opportunity to participate in our 401(k) retirement savings plan. Under the 401(k), we match participants' contributions, which become vested over four years.
Goosehead offers its employees a competitive health benefits package, including medical, dental, and vision insurance, as well as flex and health savings accounts, life insurance, short-term disability insurance, long-term disability insurance, accident insurance, critical illness insurance, a 401(k) retirement savings plan, and an employee stock purchase plan. Under the 401(k), we match participants' contributions, which vest over four years.
Franchisees who sign a Franchise Agreement after January 1, 2018, are required to pay a minimum monthly Royalty Fee if the Royalty Fee derived from the gross commissions on insurance policies does not exceed a specific amount. Total Franchises decreased by 33% to 1,415 in 2023 from 2,125 in 2022.
Franchisees who sign a Franchise Agreement after January 1, 2018, are required to pay a minimum monthly Royalty Fee if the Royalty Fee derived from the gross commissions on insurance policies does not exceed a specific amount.
Our differentiated business model and innovative technology platform have enabled us to deliver insurance customers a superior experience, as evidenced by our 92 Net Promoter Score, which is 2.6x the 2022 P&C Industry Average according to Statista.
Our differentiated business model and innovative technology platform have enabled us to deliver insurance customers a superior experience, as evidenced by our 89 Net Promoter Score, which is 4.0x the 2024 Industry Average according to Qualtrics XM Institute.
The pace of our national build-out will be aided by the regulatory approvals, product offering approvals and Carrier relationships we have already established across the continental United States. 14 Franchise tenure profile • Continue to develop innovative ways to drive productivity . We believe that our agents are already among the most efficient personal lines agents in the industry.
This growth will be further enhanced by our continued national expansion of franchisees. The pace of our national build-out will be aided by the regulatory approvals, product offering approvals and Carrier relationships we have already established across the continental United States. 14 Franchise tenure profile • Continue to develop innovative ways to drive productivity .
We have franchise locations either operating or signed in the following states, which cover over 99% of the US population: Geographic footprint Operating agencies State December 31, 2023 Texas 297 Florida 85 California 79 Illinois 52 Michigan 50 Pennsylvania 49 North Carolina 46 Georgia 42 Louisiana 39 Colorado 35 Virginia 35 New York 34 Maryland 34 Missouri 34 Other 315 Total (1) 1,226 Profitability of Corporate and Franchise Sales Both corporate sales and franchise sales generate New Business Commissions and Agency Fees for efforts in identifying, placing, and making effective insurance coverage on behalf of our customers.
We have franchise locations operating in the following states, which cover over 98% of the US population: Geographic footprint Operating agencies State December 31, 2024 Texas 267 Florida 81 California 73 Illinois 44 Michigan 44 Pennsylvania 44 Louisiana 38 Georgia 37 North Carolina 36 Virginia 35 Colorado 30 New Jersey 30 Missouri 28 Maryland 27 Other 289 Total (1) 1,103 Profitability of Corporate and Franchise Sales Both corporate sales and franchise sales generate New Business Commissions and Agency Fees for efforts in identifying, placing, and making effective insurance coverage on behalf of our customers.
Jones was a Senior Partner and Director at Bain & Company, a global management consulting firm, where he also served for many years as Global Head of Recruiting. Mr.
Jones served as Goosehead's Chief Executive Officer and Chairman since the Company's inception. Prior to co-founding Goosehead, Mr. Jones was a Senior Partner and Director at Bain & Company, a global management consulting firm, where he also served for many years as Global Head of Recruiting. Mr.
Jones made significant contributions in strengthening the finance function leading up to and following the Company’s initial public offering. Prior to joining Goosehead, Mr.
Jones currently oversees Goosehead’s internal and external financial reporting, financial planning and analysis, treasury function, and investor relations. Mr. Jones made significant contributions in strengthening the finance function leading up to and following the Company’s initial public offering. Prior to joining Goosehead, Mr.
Miller has served on the board since March 2018. For the past 15 years, Mr. Miller has worked for some of the largest private equity firms in the world helping drive large scale financial and operational transformations. Mr. Miller was the Chief Financial Officer of Pluralsight, Finastra, Marketo, and Active Networks (all Vista Equity Partners portfolio companies at the time).
Miller has served on the board since March 2018 and previously served as Goosehead's President and Chief Operating Officer since May 2022. For the past 15 years, Mr. Miller has worked for some of the largest private equity firms in the world helping drive large scale financial and operational transformations. Mr.
In the short-term, our agents have proven to be especially adept at learning new techniques and mastering new technologies. This has enabled our agents to generate approximately 2.8x as much new business as top performing personal lines agents after three years, according to the 2023 Best Practices Study.
This has enabled our agents to generate approximately 2.8x as much new business as top performing personal lines agents after three years, according to the 2024 Best Practices Study.
While there are other independent agents who also provide choice, we believe that they lack the scale, talent, and technology of Goosehead, leading to a poorer client experience.
Clients will have different insurance needs throughout their lifetime, and our model allows us to serve them at every stage of life. While there are other independent agents who also provide choice, we believe that they lack the scale, depth of talent, and technology of Goosehead, leading to a poorer client experience.
This growth has been driven by several factors including (1) our team’s ability to recruit talented agents to our platform; (2) our agents’ leveraging of Goosehead's sales blueprint and proprietary technology leading to higher levels of productivity in winning new business; and (3) our service centers’ ability to retain renewal business. Furthermore, we are profitable.
This growth has been driven by several factors including (1) our team’s ability to recruit talented agents to our platform; (2) our agents’ leveraging of Goosehead's sales blueprint and proprietary technology leading to higher levels of productivity in winning new business; and (3) our service centers’ ability to retain renewal business. 6 Our Go-to-Market Strategy Our business model allows both our corporate and franchise sales agents to concentrate on sales and marketing activities related to acquiring new clients and issuing new policies, thus growing New Business Revenue and Renewal Revenue more rapidly than in other systems.
Substantially all of our agents are recent college graduates, whereas 61% of personal lines agents in the industry are over 50 years old, according to the 2022 Future One Agency Universe Case Study. This gives us a significant advantage both in the short- and long-term.
Substantially all of our agents are recent college graduates, whereas 66% of personal lines agents in the industry are over 40 years old, according to Zippia. This gives us a significant advantage both in the short- and long-term. In the short-term, our agents have proven to be especially adept at learning new techniques and mastering new technologies.
The 9 Company also earns and records New Business Royalty Fees revenue equal to 20% of the New Business Commissions and Agency Fees generated by franchise sales and incurs fixed and variable fulfillment and administrative costs.
The Company also earns and records New Business Royalty Fees revenue equal to 20% of the New Business Commissions and Agency Fees generated by franchise sales and incurs fixed and variable fulfillment and administrative costs. 9 Each subsequent term that a policy renews, both corporate sales and franchise sales generate Renewal Commissions by assisting the customer to make effective a renewal policy that satisfies the customer’s current insurance coverage needs.
He also served as the Chief Financial Officer of Sabre, and L.H.P. Hospital Group. At Sabre, he held multiple operating and finance positions and was instrumental in the company’s initial public offering and its subsequent $5 billion privatization transaction. 13 ◦ Mark E.
At Sabre, he held multiple operating and finance positions and was instrumental in the company’s initial public offering and its subsequent $5 billion privatization transaction. ◦ Mark E. Jones, Jr. joined Goosehead in 2016 as Controller, was promoted to Vice President - Finance in 2020, and Chief Financial Officer in 2022. Mr.
We manage our service centers with the goal to maximize NPS, which we believe maximizes retention. This differentiated level of service has enabled us to earn an NPS of 92 in 2023, a modest increase from 90 in 2022, greater than highly regarded brands like Ritz Carlton and Nordstrom and 2.6x the 2022 industry average, according to Statista.
We manage our service centers with the goal to maximize NPS, which we believe maximizes retention. This differentiated level of service has enabled us to earn an NPS of 89 in 2024, a modest decrease from 92 in 2023 and 4.0x the 2024 industry average, according to Qualtrics XM Institute and Bain & Company, Inc.
Total Franchises operating decreased by 13% to 1,226 in 2023 from 1,413 in 2022. Competition The insurance brokerage business is highly competitive, and numerous firms actively compete with us for customers and insurance markets. Competition in the insurance business is largely based upon innovation, knowledge, terms and condition of coverage, quality of service and price.
Competition The insurance brokerage business is highly competitive, and numerous firms actively compete with us for customers and insurance markets. Competition in the insurance business is largely based upon innovation, knowledge, terms and conditions of coverage, quality of service, and price. A number of firms and banks with substantially greater resources and market presence compete with us.
Goosehead's Digital Agent, a proprietary online quoting platform, allows clients to shop their home and auto insurance rates with top carriers. The Digital Agent combines millions of data points, which includes Goosehead's proprietary quoting data over hundreds of thousands of transactions from 20+ years of experience, to bring clients actual quotes specific to their needs.
The Digital Agent combines millions of data points, which includes Goosehead's proprietary quoting data over hundreds of thousands of transactions from 20+ years of experience, to bring clients actual quotes specific to their needs. Clients can then bind these quotes through a short call with one of our local licensed agents with expertise in the client's specific market.
This allows us to provide value by finding the right coverage at the lowest price, and to do so in one phone-call so that the client does not have to spend hours shopping for themselves.
This allows us to provide value by finding the right coverage at the lowest price so that the client does not have to spend hours shopping for themselves. Knowledgeable sales and service agents Our clients benefit from the value of having a knowledgeable agent explain and evaluate coverages to help the client make smart insurance buying decisions.
After signing their documents electronically, clients can engage with Goosehead’s industry leading service team via phone, text, online chat, or email. Our choice model, superior sales and service agents, and proprietary technology have led to 86% client retention during 2023, which we believe is among the best in our industry.
After signing their documents electronically, clients can engage with Goosehead’s industry-leading service team via phone, text, online chat, or email. Goosehead's Digital Agent, a proprietary online quoting platform, allows clients to shop their home and auto insurance rates with top carriers.
Premiums in franchise sales grew 37% during 2023. As of December 31, 2023, we have 1,415 total franchises, including 1,226 franchises operating and 189 in implementation, a 33% decrease in total franchises and a 13% decrease in operating agencies in 2023 compared to 2022.
As of December 31, 2024, we have 1,103 franchises operating which represents a 10% decrease in 2024 compared to 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBecause the revenue we earn on the sale of certain insurance products is based on premiums and commission rates set by Carriers, any decreases in these premiums or commission rates, or actions by Carriers seeking repayment of commissions, could result in revenue decreases or expenses to us.
Biggest changeSummary of principal risk factors Risks relating to our business • An overall decline in economic activity could have a material adverse effect on the financial condition and results of operations of our business. • Volatility or declines in premiums or other adverse trends in the insurance industry may seriously undermine our profitability. • Because the revenue we earn on the sale of certain insurance products is based on premiums and commission rates set by Carriers, any decreases in these premiums or commission rates, or actions by Carriers seeking repayment of commissions, could result in revenue decreases or expenses to us. • Contingent Commissions we receive from Carriers are less predictable than standard commissions, and any decrease in the amount of the commissions we receive could adversely affect our results of operations. • Competition in our industry is intense and, if we are unable to compete effectively, we may lose clients and our financial results may be negatively affected. • Our business is dependent upon information processing systems.
Negative public perception, adverse publicity or negative comments in social media, including as a result of actions taken by companies we acquire before the acquisition, could damage our reputation, or harm our relationships with regulators and the communities in which we operate, if we do not, or are not perceived to, adequately address these issues.
Negative public perception, adverse publicity or negative comments in social media, including as a result of actions taken by companies we acquire before acquisition, could damage our reputation, or harm our relationships with regulators and the communities in which we operate, if we do not, or are not perceived to, adequately address these issues.
Our certificate of incorporation and by-laws provide for, among other things: • Until the Substantial Ownership Requirement is no longer met, the Pre-IPO LLC Members may designate a majority of the nominees for election to our board of directors, including the nominee for election to serve as Chairman of our board of directors; 41 • at any time after the Substantial Ownership Requirement is no longer met, there will be: ◦ restrictions on the ability of our stockholders to call a special meeting and the business that can be conducted at such meeting or to act by written consent; ◦ supermajority approval requirements for amending or repealing provisions in the certificate of incorporation and by-laws; ◦ a division of the board of directors into three classes of directors, with each class as equal in number as possible, serving staggered three-year terms, and such directors may only be removed for cause and by the affirmative vote of holders of 75% of the total voting power of our outstanding shares of common stock, voting together as a single class; • our ability to issue additional shares of Class A common stock and to issue preferred stock with terms that the board of directors may determine, in each case without stockholder approval (other than as specified in our certificate of incorporation); • the absence of cumulative voting in the election of directors; and • advance notice requirements for stockholder proposals and nominations.
Our certificate of incorporation and by-laws provide for, among other things: • Until the Substantial Ownership Requirement is no longer met, the Pre-IPO LLC Members may designate a majority of the nominees for election to our board of directors, including the nominee for election to serve as Chairman of our board of directors; • at any time after the Substantial Ownership Requirement is no longer met, there will be: ◦ restrictions on the ability of our stockholders to call a special meeting and the business that can be conducted at such meeting or to act by written consent; ◦ supermajority approval requirements for amending or repealing provisions in the certificate of incorporation and by-laws; ◦ a division of the board of directors into three classes of directors, with each class as equal in number as possible, serving staggered three-year terms, and such directors may only be removed for cause and by the affirmative vote of holders of 75% of the total voting power of our outstanding shares of common stock, voting together as a single class; • our ability to issue additional shares of Class A common stock and to issue preferred stock with terms that the board of directors may determine, in each case without stockholder approval (other than as specified in our certificate of incorporation); • the absence of cumulative voting in the election of directors; and • advance notice requirements for stockholder proposals and nominations.
Such failures or insurance withdrawals on the part of our Carriers could occur for any number of reasons, including large unexpected payouts related to climate change or other emerging risk areas. 22 Competition in our industry is intense and, if we are unable to compete effectively, we may lose clients and our financial results may be negatively affected.
Such failures or insurance withdrawals on the part of our Carriers could occur for any number of reasons, including large unexpected payouts related to climate change or other emerging risk areas. Competition in our industry is intense and, if we are unable to compete effectively, we may lose clients and our financial results may be negatively affected.
If a client is not satisfied with our services, it could cause us to incur additional costs and impair profitability or lose the client relationship altogether, which may negatively impact other clients’ perception regarding us. Our success is also dependent on maintaining a good reputation with existing and potential employees, investors, regulators and the communities in which we operate.
If a client is not 27 satisfied with our services, it could cause us to incur additional costs and impair profitability or lose the client relationship altogether, which may negatively impact other clients’ perception regarding us. Our success is also dependent on maintaining a good reputation with existing and potential employees, investors, regulators and the communities in which we operate.
To the extent that we do not distribute such excess cash as dividends on our Class A common stock and instead, for example, hold such cash balances or lend them to Goosehead Financial, LLC, the Pre-IPO LLC Members would benefit from any value attributable to such cash balances as a result of their ownership of Class A common stock following a redemption or exchange of their LLC Units.
To the extent that we do not distribute such excess cash as dividends on our Class A common stock and instead, for example, hold such cash balances or lend them to Goosehead Financial, LLC, the Pre-IPO LLC Members would benefit from any value attributable to such cash balances as a result of their ownership of Class A 40 common stock following a redemption or exchange of their LLC Units.
In addition, the tax receivable agreement provides that, upon certain mergers, asset sales or other forms of business combination, or certain other changes of control, our obligations or our successor’s obligations with respect to tax benefits would be based on certain assumptions, including that we or our successor would have sufficient taxable income to fully utilize the increased tax deductions and tax basis and other benefits covered by the tax receivable agreement.
In addition, the tax receivable agreement provides that, upon certain mergers, asset sales or other forms of business combination, or certain other changes of control, our obligations or our successor’s obligations with 42 respect to tax benefits would be based on certain assumptions, including that we or our successor would have sufficient taxable income to fully utilize the increased tax deductions and tax basis and other benefits covered by the tax receivable agreement.
Our inability to successfully recover should we experience a disaster or other business continuity problem, could materially interrupt our business operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships, or legal liability. Our insurance coverage with respect to natural disasters is limited and is subject to deductibles and coverage limits.
Our inability to successfully recover should we experience a disaster or other business continuity problem, could materially interrupt our business operations and cause material financial loss, loss of human capital, regulatory actions, reputational harm, damaged client relationships, or legal liability. Our insurance 26 coverage with respect to natural disasters is limited and is subject to deductibles and coverage limits.
If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions, and investments, any of which could impede the implementation of our business strategy or prevent us from entering into transactions that would otherwise benefit our business.
If we cannot service our indebtedness, we may have to take actions such as selling 31 assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions, and investments, any of which could impede the implementation of our business strategy or prevent us from entering into transactions that would otherwise benefit our business.
Further, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data privacy or cybersecurity.
Further, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or 39 adverse publicity relating to data privacy or cybersecurity.
Some Carriers have agreed with regulatory authorities to end the payment of Contingent Commissions on insurance products, which could impact our commissions that are based on the volume, consistency and profitability of business generated by us. We cannot predict the impact that any new laws, rules or regulations may have on our business and financial results.
Some Carriers have agreed with regulatory authorities to end the payment of 23 Contingent Commissions on insurance products, which could impact our commissions that are based on the volume, consistency and profitability of business generated by us. We cannot predict the impact that any new laws, rules or regulations may have on our business and financial results.
Such assumptions, estimates or judgments, however, are both subjective and could change in the future as more information becomes known, which could impact the amounts reported and disclosed in our consolidated financial statements. Additionally, changes in accounting standards could increase costs to the organization and could have an adverse impact on our future financial position and results of operations.
Such assumptions, estimates or judgments, however, are subjective and could change in the future as more information becomes known, which could impact the amounts reported and disclosed in our consolidated financial statements. Additionally, changes in accounting standards could increase costs to the organization and could have an adverse impact on our future financial position and results of operations.
We cannot ensure that any limitations of liability provisions in our agreements with customers, vendors and other third parties with which we do business would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim in connection with a security breach, cyberattack or other similar incident.
We cannot ensure that any limitations of liability provisions in our agreements with customers, vendors and other third parties with which we do business would be enforceable or 38 adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim in connection with a security breach, cyberattack or other similar incident.
We 26 could also incur additional costs and require additional resources to monitor, report, and comply with various corporate responsibility and stakeholder interest practices. In addition, a variety of organizations have developed ratings to measure the performance of companies on topics of corporate responsibility or stakeholder interests, and the results of these assessments are widely publicized.
We could also incur additional costs and require additional resources to monitor, report, and comply with various corporate responsibility and stakeholder interest practices. In addition, a variety of organizations have developed ratings to measure the performance of companies on topics of corporate responsibility or stakeholder interests, and the results of these assessments are widely publicized.
We are susceptible to losses and interruptions caused by hurricanes (particularly in Texas, where our headquarters and several offices are located), earthquakes, power shortages, telecommunications failures, water shortages, floods, fire, extreme weather conditions, geopolitical events such as terrorist acts and other natural or man-made disasters.
We are susceptible to losses and interruptions caused by hurricanes (particularly in Texas, where our headquarters and several offices are located, and Florida), earthquakes, power shortages, telecommunications failures, water shortages, floods, fire, extreme weather conditions, geopolitical events such as terrorist acts and other natural or man-made disasters.
Even if a license is available to us, it could be non-exclusive thereby giving our competitors and other third parties access to the same technologies licensed to us, and we may be required to pay significant upfront fees, milestone payments or royalties, which would increase our operating expenses.
Even if a license is available to us, it could be non-exclusive 37 thereby giving our competitors and other third parties access to the same technologies licensed to us, and we may be required to pay significant upfront fees, milestone payments or royalties, which would increase our operating expenses.
New competition as a result of these or other competitive or industry developments could cause the demand for our products and services to decrease, which could in turn adversely affect our business, financial condition and results of operations. 23 Our business, financial condition and results of operations may be negatively affected by E&O claims.
New competition as a result of these or other competitive or industry developments could cause the demand for our products and services to decrease, which could in turn adversely affect our business, financial condition and results of operations. Our business, financial condition and results of operations may be negatively affected by E&O claims.
Effective intellectual property protection may not be available in every market in which we operate. Additionally, we cannot guarantee that future trademark registrations for pending or future applications will issue, or that any registered trademarks will be enforceable or provide adequate protection of our intellectual property and other proprietary rights.
Effective intellectual property protection may not be available in 36 every market in which we operate. Additionally, we cannot guarantee that future trademark registrations for pending or future applications will issue, or that any registered trademarks will be enforceable or provide adequate protection of our intellectual property and other proprietary rights.
The failure of our Franchisees to operate their franchises successfully could have a material adverse effect on us, our reputation, our brand and our ability to attract prospective Franchisees and could materially adversely affect our business, financial condition or results of operations. Our Franchisees and agents could take actions that could harm our business.
The failure of our Franchisees to operate their franchises successfully could have a material adverse effect on us, 34 our reputation, our brand and our ability to attract prospective Franchisees and could materially adversely affect our business, financial condition or results of operations. Our Franchisees and agents could take actions that could harm our business.
Any such changes may trigger a change of control event that could result in us being forced to repay the outstanding sums owed under our Credit Agreement. If any such event occurs, this may negatively affect our financial condition and operating results.
Any such changes may trigger a change of control event that could 33 result in us being forced to repay the outstanding sums owed under our Credit Agreement. If any such event occurs, this may negatively affect our financial condition and operating results.
If these stockholders sell substantial amounts of shares of Class A common stock in the public market (including any shares of Class A common stock issued upon redemption or exchange of LLC Units), or the market perceives that such sales may occur, the market price of our shares of Class A common stock could be adversely affected.
If these stockholders sell substantial amounts of shares of Class A common 43 stock in the public market (including any shares of Class A common stock issued upon redemption or exchange of LLC Units), or the market perceives that such sales may occur, the market price of our shares of Class A common stock could be adversely affected.
A substantial unsatisfied judgment against us or one of our subsidiaries could result in bankruptcy, which would materially and adversely affect our business, financial condition and results of operations. 34 We may not be able to manage growth successfully.
A substantial unsatisfied judgment against us or one of our subsidiaries could result in bankruptcy, which would materially and adversely affect our business, financial condition and results of operations. We may not be able to manage growth successfully.
Moreover, any loss incurred could exceed policy limits or the Franchisee could lack the required insurance at the time the claim arises, in breach of the 33 insurance requirement, and policy payments made to Franchisees may not be made on a timely basis.
Moreover, any loss incurred could exceed policy limits or the Franchisee could lack the required insurance at the time the claim arises, in breach of the insurance requirement, and policy payments made to Franchisees may not be made on a timely basis.
Policing unauthorized use of our intellectual property is difficult, expensive and time-consuming, and we may be required to spend significant resources to monitor and protect our intellectual property rights. 35 Failure to protect our intellectual property adequately could harm our reputation and affect our ability to compete effectively.
Policing unauthorized use of our intellectual property is difficult, expensive and time-consuming, and we may be required to spend significant resources to monitor and protect our intellectual property rights. Failure to protect our intellectual property adequately could harm our reputation and affect our ability to compete effectively.
The Pre-IPO LLC Members may not be inclined to permit us to issue additional shares of 39 Class A common stock, including for the facilitation of acquisitions, if it would dilute their holdings below the 10% threshold.
The Pre-IPO LLC Members may not be inclined to permit us to issue additional shares of Class A common stock, including for the facilitation of acquisitions, if it would dilute their holdings below the 10% threshold.
Our board of directors will take into account general economic and business conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions and covenants contained in our debt agreements, business prospects and other factors that our board of directors considers relevant.
Our board of directors will take into account general economic and business conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, including restrictions and covenants contained in our debt agreements, business prospects and other factors that our board of directors 44 considers relevant.
Depending on the function involved, such errors may also lead to business disruption, processing 24 inefficiencies, the loss of or damage to intellectual property through a security breach, the loss of confidential proprietary or personal data (including sensitive personal data) through a security breach, or otherwise.
Depending on the function involved, such errors may also lead to business disruption, processing inefficiencies, the loss of or damage to intellectual property through a security breach, the loss of confidential proprietary or personal data (including sensitive personal data) through a security breach, or otherwise.
While we or our third-party service providers have not experienced any significant disruption, failure or breach impacting our or their information technology systems, any such disruption, failure or breach could adversely affect our business, financial condition and results of operations.
While we or our third-party service providers have not experienced any significant disruption, failure or breach impacting our or their information technology systems, any such disruption, failure or breach could adversely affect our business, financial condition, reputation and results of operations.
Carriers may be unwilling to allow us to sell their existing or new insurance products or may amend our agreements with them, for a 31 variety of reasons, including for competitive or regulatory reasons or because of a reluctance to distribute their products through our platform.
Carriers may be unwilling to allow us to sell their existing or new insurance products or may amend our agreements with them, for a variety of reasons, including for competitive or regulatory reasons or because of a reluctance to distribute their products through our platform.
If we fail to attract and retain franchise agents, our Franchisees may fail to generate the revenue necessary to pay the contractual fees owed to us. 32 The nature of franchise relationships can give rise to conflict.
If we fail to attract and retain franchise agents, our Franchisees may fail to generate the revenue necessary to pay the contractual fees owed to us. The nature of franchise relationships can give rise to conflict.
The FTC requires that franchisors make extensive disclosure to prospective Franchisees but does not require registration. A number of states require registration and/or disclosure in connection with franchise offers and sales.
The FTC requires that franchisors make extensive disclosure to prospective Franchisees but does not require registration. A number of states require 35 registration and/or disclosure in connection with franchise offers and sales.
Regulatory review or the issuance of interpretations of existing laws and regulations may result in the enactment of new laws and regulations that could adversely affect our operations or our ability to conduct business profitably.
Regulatory review or the issuance of interpretations of existing laws and regulations may result in the enactment of new laws and regulations that could 30 adversely affect our operations or our ability to conduct business profitably.
In addition, many of the businesses that we acquire and develop will likely have significantly smaller scales of operations prior 29 to the implementation of our growth strategy.
In addition, many of the businesses that we acquire and develop will likely have significantly smaller scales of operations prior to the implementation of our growth strategy.
The GLBA also requires financial institutions to implement an information security program that includes administrative, technical and 37 physical safeguards to ensure the security and confidentiality of customer records and information.
The GLBA also requires financial institutions to implement an information security program that includes administrative, technical and physical safeguards to ensure the security and confidentiality of customer records and information.
In extreme cases, revocation of a subsidiary’s authority to do business in one or more jurisdictions could result from failure to comply with 28 regulatory requirements. In extreme cases, revocation of a subsidiary’s authority to do business in one or more jurisdictions could result from failure to comply with regulatory requirements.
In extreme cases, revocation of a subsidiary’s authority to do business in one or more jurisdictions could result from failure to comply with regulatory requirements. In extreme cases, revocation of a subsidiary’s authority to do business in one or more jurisdictions could result from failure to comply with regulatory requirements.
Our brand value could diminish significantly if any such incidents or other matters erode consumer confidence in us, which may result in a decrease in our total agent count and, ultimately, lower continuing franchise fees, which in turn would materially and adversely affect our business, financial condition and results of operations.
Our brand value could diminish significantly if any such incidents or other matters erode client confidence in us, which may result in a decrease in our total agent count and, ultimately, lower continuing franchise fees, which in turn would materially and adversely affect our business, financial condition and results of operations.
As a public company, we are required to maintain effective internal control over financial reporting. While management has certified that our internal control over financial reporting was effective as of December 31, 2023, because internal control over financial reporting is complex, there can be no assurance that our internal control over financial reporting will be effective in the future.
As a public company, we are required to maintain effective internal control over financial reporting. While management has certified that our internal control over financial reporting was effective as of December 31, 2024, because internal control over financial reporting is complex, there can be no assurance that our internal control over financial reporting will be effective in the future.
In 2022, we released a report on our corporate responsibility and stakeholder interest activities that incorporates the guidelines of the Sustainability Accounting Standards Board (SASB) and our own assessments and priorities. Over time, we expect to expand our public disclosure in these areas.
In 2024, we released a report on our corporate responsibility and stakeholder interest activities that incorporates the guidelines of the Sustainability Accounting Standards Board (SASB) and our own assessments and priorities. Over time, we expect to expand our public disclosure in these areas.
The economic activity that impacts property and casualty insurance is most closely correlated with employment levels, corporate revenue and asset values. In addition, an increase in consumer preference for car- and ride-sharing services, as opposed to automobile ownership, may result in a long-term reduction in the number of vehicles per capita, and consequently the automobile insurance industry.
The economic activity that impacts property and casualty insurance is most closely correlated with employment levels, corporate revenue and asset values. In addition, an increase in client preference for car- and ride-sharing 21 services, as opposed to automobile ownership, may result in a long-term reduction in the number of vehicles per capita, and consequently the automobile insurance industry.
If such challenges were to be successful, it could limit our ability to prevent others from using similar marks or designs may ultimately result in a reduced distinctiveness of our brand in the minds of consumers.
If such challenges were to be successful, it could limit our ability to prevent others from using similar marks or designs may ultimately result in a reduced distinctiveness of our brand in the minds of clients.
We entered into a tax receivable agreement with the Pre-IPO LLC Members that provides for the payment by us 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 we actually realize as a result of (i) any increase in tax basis in Goosehead Insurance, Inc.’s assets resulting from (a) the purchase of LLC Units from any of the Pre-IPO LLC Members using the net proceeds from any future offering, (b) redemptions or exchanges by the Pre-IPO LLC Members of LLC Units for shares of our 40 Class A common stock or (c) payments under the tax receivable agreement and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement.
We entered into a tax receivable agreement on May 1, 2018 with the Pre-IPO LLC Members that provides for the payment by us 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 we actually realize as a result of (i) any increase in tax basis in Goosehead Insurance, Inc.’s assets resulting from (a) the purchase of LLC Units from any of the Pre-IPO LLC Members using the net proceeds from any future offering, (b) redemptions or exchanges by the Pre-IPO LLC Members of LLC Units for shares of our Class A common stock or (c) payments under the tax receivable agreement and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement.
In addition, laws in all 50 U.S. states generally require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach.
In addition, laws in all 50 U.S. states generally require businesses to provide notice under certain circumstances to clients whose personal information has been disclosed as a result of a data breach.
However, there can be no assurance that we will be successful in enforcing these contracts. In addition, on January 5, 2023, the FTC voted to publish a proposed rule that, if finalized, would impose a near-complete ban on employers offering, entering, and maintaining non-compete 27 agreements with their workers, by defining such arrangements as per se methods of unfair competition.
However, there can be no assurance that we will be successful in enforcing these contracts. In addition, on January 5, 2023, the FTC voted to publish a proposed rule that, if given effect, would impose a near-complete ban on employers offering, entering, and maintaining non-compete agreements with their workers, by defining such arrangements as per se methods of unfair competition.
We intend to cause Goosehead Financial, LLC to make pro rata distributions to the Pre-IPO LLC Members and us in an amount at least sufficient to allow us and the Pre-IPO LLC Members to pay all applicable taxes, to make payments under the tax receivable agreement we will enter into with the Pre-IPO LLC Members and to pay our corporate and other overhead expenses.
We intend to cause Goosehead Financial, LLC to make pro rata distributions to the Pre-IPO LLC Members and us in an amount at least sufficient to allow us and the Pre-IPO LLC Members to pay all applicable taxes, to make payments under the tax receivable agreement entered into with the Pre-IPO LLC Members and to pay our corporate and other overhead expenses.
Factors, such as business revenue, economic conditions, including adverse conditions resulting from uncertainty concerning government shutdowns, debt ceilings or funding, the volatility and strength of the capital markets, increased rates of inflation, high interest rates and public health emergencies can affect the business and economic environment.
Factors, such as business revenue, economic conditions, including adverse conditions resulting from uncertainty concerning government shutdowns, debt ceilings or funding, the volatility and strength of the capital markets, increased rates of inflation, uncertain levels of interest rates and public health emergencies can affect the business and economic environment.
Risks relating to our organizational structure We are a holding company and our principal asset is our 65.8% ownership interest in Goosehead Financial, LLC, and we are accordingly dependent upon distributions from Goosehead Financial, LLC to pay dividends, if any, taxes, make payments under the tax receivable agreement and pay other expenses.
Risks relating to our organizational structure We are a holding company and our principal asset is our 66.2% ownership interest in Goosehead Financial, LLC, and we are accordingly dependent upon distributions from Goosehead Financial, LLC to pay dividends, if any, taxes, make payments under the tax receivable agreement and pay other expenses.
These factors, which are not within our control, include the capacity of Carriers to place new business, underwriting and non-underwriting profits of Carriers, consumer demand for insurance products, the availability of comparable products from other Carriers at a lower cost and the availability of alternative insurance products, such as government benefits and self-insurance products, to consumers.
These factors, which are not within our control, include the capacity of Carriers to place new business, underwriting and non-underwriting profits of Carriers, client demand for insurance products, the availability of comparable products from other Carriers at a lower cost and the availability of alternative insurance products, such as government benefits and self-insurance products, to clients.
We are exposed to various risks arising out of natural disasters, including earthquakes, hurricanes, fires, floods, landslides, tornadoes, typhoons, tsunamis, hailstorms, explosions, climate events or weather patterns and pandemic health events (such as the COVID-19 virus), as well as man-made disasters, including acts of terrorism, military actions, security breaches, cyberattacks and other similar incidents, explosions and biological, chemical or radiological events.
We are exposed to various risks arising out of natural disasters, including earthquakes, hurricanes, fires, floods, landslides, tornadoes, typhoons, tsunamis, hailstorms, explosions, climate events or weather patterns and pandemic health events, as well as man-made disasters, including acts of terrorism, military actions, security breaches, cyberattacks and other similar incidents, explosions and biological, chemical or radiological events.
Our board of directors will periodically review the cash generated from our business and the capital expenditures required to finance our global growth plans and determine whether to declare periodic dividends to our stockholders.
Our board of directors periodically reviews the cash generated from our business and the capital expenditures required to finance our global growth plans and determine whether to declare periodic dividends to our stockholders.
Approximately 14.5 million shares of our Class A common stock and LLC Units (which may be redeemed or exchanged for a corresponding number of shares of Class A common stock) are held by the Pre-IPO LLC Members, the Goosehead Management Holders and Texas Wasatch Holders.
Approximately 12.9 million shares of our Class A common stock and LLC Units (which may be redeemed or exchanged for a corresponding number of shares of Class A common stock) are held by the Pre-IPO LLC Members, the Goosehead Management Holders and Texas Wasatch Holders.
In addition, there have been and may continue to be various trends in the insurance industry toward alternative insurance markets including, among other things, greater levels of self-insurance, captives, rent-a-captives, risk retention groups and non-insurance capital markets-based solutions to traditional insurance.
In addition, there have been and may continue to be (including as a result of substantial increases in insurance premiums) various trends in the insurance industry toward alternative insurance markets including, among other things, greater levels of self-insurance, captives, rent-a-captives, risk retention groups and non-insurance capital markets-based solutions to traditional insurance.
We have debt outstanding that could adversely affect our financial flexibility and subjects us to restrictions and limitations that could significantly impact our ability to operate our business. As of December 31, 2023, we had total consolidated debt outstanding of approximately $77.5 million, collateralized by substantially all of the Company’s assets, including rights to future commissions.
We have debt outstanding that could adversely affect our financial flexibility and subjects us to restrictions and limitations that could significantly impact our ability to operate our business. As of December 31, 2024, we had total consolidated debt outstanding of approximately $93.1 million, collateralized by substantially all of the Company’s assets, including rights to future commissions.
The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, data privacy and cybersecurity, consumer protection, competition, and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations.
The technologies underlying AI and its uses are subject to a variety of laws and regulations, including intellectual property, data privacy and cybersecurity, client protection, trade and export controls, competition, and equal opportunity laws, and are expected to be subject to increased regulation and new laws or new applications of existing laws and regulations.
In 2021, two Carriers represented more than 10% of total revenue at 17% and 11%. Should any of these Carriers seek to terminate its arrangements with us, we could be forced to move our business to another Carrier and some additional expense and loss of market share could possibly result.
In 2022, two Carriers represented more than 10% of total revenue at 14% and 12%. Should any of these Carriers seek to terminate its arrangements with us, we could be forced to move our business to another Carrier and some additional expense and loss of market share could possibly result.
Our homeowner and dwelling property lines of business comprised 58% of our premiums in 2023 and a majority of our new accounts are sourced by referral sources tied to home closing transactions.
Our homeowner and dwelling property lines of business comprised 61% of our premiums in 2024 and a majority of our new accounts are sourced by referral sources tied to home closing transactions.
We are a holding company and our principal asset is our direct or indirect ownership of 65.8% of the outstanding LLC Units. We have no independent means of generating revenue.
We are a holding company and our principal asset is our direct or indirect ownership of 66.2% of the outstanding LLC Units. We have no independent means of generating revenue.
For example, in 2023, the global economic environment was characterized by continued market uncertainty, inflationary pressures, high interest rates, weak housing markets, recessionary fears, and geopolitical uncertainty regarding the ongoing conflict in Ukraine, tensions across the Taiwan Strait, the Israel-Hamas conflict and other hostilities in the Middle East and their impact on global security and markets.
For example, in 2024, the global economic environment was characterized by continued market uncertainty, inflationary pressures, high interest rates, weak housing markets, natural disasters and extreme weather events, recessionary fears, and geopolitical uncertainty regarding the ongoing conflict in Ukraine, tensions across the Taiwan Strait, the Israel-Hamas conflict and other hostilities in the Middle East and their impact on global security and markets.
We derive a significant portion of our commission revenues from a limited number of Carriers, the loss of which would result in additional expense and loss of market share. In 2023, two Carriers represented more than 10% of total revenue at 16% and 12%. In 2022, two Carriers represented more than 10% of total revenue at 14% and 12%.
We derive a significant portion of our commission revenues from a limited number of Carriers, the loss of which would result in additional expense and loss of market share. In 2024, three Carriers represented more than 10% of total revenue at 19%, 15%, and 10%. In 2023, two Carriers represented more than 10% of total revenue at 16% and 12%.
If, due to the current economic environment or for any other reason, we are unable to meet Carriers’ profitability, volume or growth thresholds, or Carriers increase their estimate of loss reserves (over which we have no control), actual Contingent Commissions we receive could be less than anticipated, which could adversely affect our business, financial condition and results of operations. 21 Our business is subject to risks related to legal proceedings and governmental inquiries.
If, due to the current economic environment or for any other reason, we are unable to meet Carriers’ profitability, volume or growth thresholds, or Carriers increase their estimate of loss reserves (over which we have no control), actual Contingent Commissions we receive could be less than anticipated, which could adversely affect our business, financial condition and results of operations.
We prepare our consolidated financial statements in accordance with GAAP. These accounting principles require us to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements.
Changes in our accounting estimates and assumptions could negatively affect our financial position and operating results. We prepare our consolidated financial statements in accordance with GAAP. These accounting principles require us to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our consolidated financial statements.
The Second Amended and Restated Credit Agreement dated July 21, 2021 ("the Credit Agreement") governing our debt contains covenants that, among other things, restrict our ability to make certain restricted payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change our business or make investments and require us to comply with certain financial covenants.
The Credit Agreement dated January 8, 2025 ("the Credit Agreement") governing our debt contains covenants that, among other things, restrict our ability to make certain restricted payments, incur additional debt, engage in certain asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in certain transactions with affiliates, change our business or make investments and require us to comply with certain financial covenants.
Federal Reserve recently identified climate change as a systemic risk to the economy. It also reported that a gradual change in investor sentiment regarding climate risk introduces the possibility of abrupt tipping points or significant swings in sentiment, which could create unpredictable follow-on effects in financial markets.
Federal Reserve has in the past identified climate change as a potential risk to the stability of the financial system. It also reported that a gradual change in investor sentiment regarding climate risk introduces the possibility of abrupt tipping points or significant swings in sentiment, which could create unpredictable follow-on effects in financial markets.
While we maintain policies, procedures and technological safeguards designed to protect the security and privacy of this information, we cannot entirely eliminate the risk of improper access to or disclosure of personal information nor the related costs we incur to mitigate the consequences from such events.
While we maintain policies, procedures and technological safeguards designed to protect the security and privacy of this information, we cannot entirely eliminate the risk of improper access to or disclosure of personal information nor the related costs we incur to mitigate the consequences from such events. Techniques used to obtain unauthorized access or to sabotage systems change frequently.
We are subject to laws and regulations, as well as regulatory investigations. The insurance industry has been subject to a significant level of scrutiny by various regulatory bodies, including state attorneys general and insurance departments, concerning certain practices within the insurance industry.
The insurance industry has been subject to a significant level of scrutiny by various regulatory bodies, including state attorneys general and insurance departments, concerning certain practices within the insurance industry.
Climate risks, including the risk of an economic crisis, risks associated with the physical effects of climate change and disruptions caused by the transition to a low-carbon economy, could adversely affect our business, results of operations and financial condition. The effects of climate change continue to create an alarming level of concern for the state of the global environment.
Climate risks, including the risk of an economic crisis, risks associated with the physical effects of climate change and disruptions caused by the transition to a low-carbon economy, could adversely affect our business, results of operations and financial condition.
The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could cause our obligations with respect to our debt to be accelerated and have a material adverse effect on our business, financial condition and results of operations. 30 Changes in our accounting estimates and assumptions could negatively affect our financial position and operating results.
The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could cause our obligations with respect to our debt to be accelerated and have a material adverse effect on our business, financial condition and results of operations.
The Pre-IPO LLC Members control approximately 34.2% of the combined voting power of our common stock.
The Pre-IPO LLC Members control approximately 33.8% of the combined voting power of our common stock.
Although the potential scope of the FTC’s proposed rule is uncertain, such rule, if adopted, could have a material adverse effect on our ability to retain key personnel and existing business, and on our ability to generate new business.
Although the outcome of the litigation is uncertain, such rule, if the stay is lifted, could have a material adverse effect on our ability to retain key personnel and existing business, and on our ability to generate new business.
In addition, regulation of AI is rapidly evolving as legislators and regulators are increasingly focused on these powerful emerging technologies.
In addition, regulation of AI is rapidly evolving as legislators and regulators are increasingly focused on these powerful emerging technologies and as they remain the object of intense geostrategic competition.
As the sole managing member of Goosehead Financial, LLC, we intend to cause Goosehead Financial, LLC to make distributions to the Pre-IPO LLC Members and us, in amounts sufficient to cover all applicable taxes payable by us and the Pre-IPO LLC members and any payments we are obligated to make under the tax receivable agreement we intend to enter into as part of the reorganization transactions and to fund dividends to our stockholders in accordance with our dividend policy, to the extent our board of directors declares such dividends. 38 Deterioration in the financial conditions, earnings or cash flow of Goosehead Financial, LLC and its subsidiaries for any reason could limit or impair their ability to pay such distributions.
As the sole managing member of Goosehead Financial, LLC, we intend to cause Goosehead Financial, LLC to make distributions to the Pre-IPO LLC Members and us, in amounts sufficient to cover all applicable taxes payable by us and the Pre-IPO LLC members and any payments we are obligated to make under the tax receivable agreement we entered into as part of the reorganization transactions and to fund dividends to our stockholders in accordance with our dividend policy, to the extent our board of directors declares such dividends.
They could also result in reduced underwriting capacity of our Carriers, making it more difficult for our agents to place business. Disasters also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal business operations.
These consequences could, among other things, result in a decline in business and increased claims from those areas. They could also result in reduced underwriting capacity of our Carriers, making it more difficult for our agents to place business. Disasters also could disrupt public and private infrastructure, including communications and financial services, which could disrupt our normal business operations.
The spread of COVID-19 and mitigating measures caused unprecedented disruptions to the global economy and normal business operations across sectors and countries, including the sectors and countries in which we, our clients, Carriers, suppliers and other third parties operate.
The spread of COVID-19 and mitigating measures caused unprecedented disruptions to the global economy and normal business operations across sectors and countries, including the sectors and countries in which we, our clients, Carriers, suppliers and other third parties operate. Future pandemics or other outbreaks of contagious diseases may result in similar or worse economic implications and disruptions.
Furthermore, we compete with various other companies that provide risk-related services or alternatives to traditional insurance services, including Insurtech start-up companies, which are focused on using technology and innovation, including artificial intelligence, machine learning, digital platforms, data analytics, robotics and blockchain, to simplify and improve the client experience, increase efficiencies, alter business models and effect other potentially disruptive changes in the industries in which we operate.
Furthermore, we compete with various other companies that provide risk-related services or alternatives to traditional insurance services, including Insurtech start-up companies, which are focused on using technology and innovation, including artificial intelligence, machine learning, digital platforms, data analytics, robotics and blockchain, to simplify and improve the client experience, increase efficiencies, alter business models and effect other potentially disruptive changes in the industries in which we operate. 24 In addition, in recent years, private equity sponsors have invested tens of billions of dollars into the insurance sector, transforming existing players and creating new ones to compete with large brokers.
Our insurance coverage with respect to natural disasters is limited and is subject to deductibles and coverage limits. Such coverage may not be adequate or may not continue to be available at commercially reasonable rates and terms. Changes in tax laws could impact our operations and profitability. Changes in tax laws could impact our operations and profitability.
Such coverage may not be adequate or may not continue to be available at commercially reasonable rates and terms. 32 Changes in tax laws could impact our operations and profitability. Changes in tax laws could impact our operations and profitability.
Because of market cycles for insurance product pricing, which we cannot predict or control, our brokerage revenues and profitability can be volatile or remain depressed for significant periods of time.
Moreover, insurance premiums are cyclical in nature and may vary widely based on market conditions. Because of market cycles for insurance product pricing, which we cannot predict or control, our brokerage revenues and profitability can be volatile or remain depressed for significant periods of time.
Additionally, failure to maintain effective internal control over financial reporting may also negatively impact our operating results and financial condition, impair our ability to timely file our periodic and other reports with the Securities and Exchange Commission (the “SEC”), subject us to additional litigation and regulatory actions and cause us to incur substantial additional costs in future periods relating to the implementation of remedial measures. 42 We expect that our stock price will be volatile, which could cause the value of your investment to decline, and you may not be able to resell your shares at or above your investment price.
Additionally, failure to maintain effective internal control over financial reporting may also negatively impact our operating results and financial condition, impair our ability to timely file our periodic and other reports with the Securities and Exchange Commission (the “SEC”), subject us to additional litigation and regulatory actions and cause us to incur substantial additional costs in future periods relating to the implementation of remedial measures.
Our business may be harmed if we lose our relationships with Carriers, fail to maintain good relationships with Carriers, become dependent upon a limited number of Carriers or fail to develop new Carrier relationships.
The recent wildfires in Southern California and hurricanes in Florida could materially affect Carriers and could result in diminished Carrier capacity. Our business may be harmed if we lose our relationships with Carriers, fail to maintain good relationships with Carriers, become dependent upon a limited number of Carriers or fail to develop new Carrier relationships.
Furthermore, because AI technology itself is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise relating to the use of AI. 25 If we are unable to apply technology effectively in driving value for our clients through technology-based solutions or gain internal efficiencies and effective internal controls through the application of technology and related tools, our operating results, client relationships, growth and compliance programs could be adversely affected.
If we are unable to apply technology effectively in driving value for our clients through technology-based solutions or gain internal efficiencies and effective internal controls through the application of technology and related tools, our operating results, client relationships, growth and compliance programs could be adversely affected.
Securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our Class A common stock regardless of our results of operations.
This market volatility, as well as general economic, market or political conditions, could reduce the market price of our Class A common stock regardless of our results of operations.
Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives to supplement the global effort to combat climate change. If new legislation or regulation is enacted, we could incur increased costs and capital expenditures to comply with its limitations, which may impact our financial condition and operating performance. In addition, the U.S.
Congress, state legislatures and federal and state regulatory agencies have adopted or proposed legal requirements and other initiatives to combat climate change. Climate change legislation or regulation could cause us to incur increased costs and capital expenditures to comply, which may impact our financial condition and operating performance. In addition, the U.S.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur General Counsel meets with the board of directors on at least a quarterly basis to review and discuss our cybersecurity and other information technology strategies and policies. In 2023, we did not identify any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
Biggest changeOur General Counsel meets with the board of directors on at least a quarterly basis to review and discuss our cybersecurity and other information technology strategies and policies. In 2024, we did not identify any cybersecurity incidents that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
However, despite our efforts, we cannot eliminate all risks from cybersecurity threats or incidents, or provide assurances that we have not experienced an undetected cybersecurity incident. For more information about these risks, please see “Risk Factors – Risks relating to intellectual property, data privacy and cybersecurity” in this annual report on Form 10-K. 44
However, despite our efforts, we cannot eliminate all risks from cybersecurity threats or incidents, or provide assurances that we have not experienced an undetected cybersecurity incident. For more information about these risks, please see “Risk Factors – Risks relating to intellectual property, data privacy and cybersecurity” in this annual report on Form 10-K.
Our cybersecurity team, led by our Managing Director, IT Security & Compliance, is responsible for assessing and maintaining our cybersecurity risk management program. We also have two cybersecurity committees, which 43 consist of cross-functional teams comprised of key business leaders and key technical leaders in the Company as well as the heads of our legal, governance, risk and compliance functions.
Our cybersecurity team, led by our Managing Director, IT Security & Compliance, is responsible for assessing and maintaining our cybersecurity risk management program. We also have two cybersecurity committees, which consist of cross-functional teams comprised of key business leaders and key technical leaders in the Company as well as the heads of our legal, governance, risk and compliance functions.
As discussed above, we also have two cybersecurity committees which consist of cross-functional teams comprised of key business leaders and key technical leaders in the Company as well as the heads of our governance, risk and compliance functions. Each of our cybersecurity committees meets monthly to address cybersecurity risks.
As discussed above, we also have two cybersecurity committees which consist of cross-functional teams comprised of 45 key business leaders and key technical leaders in the Company as well as the heads of our governance, risk and compliance functions. Each of our cybersecurity committees meets monthly to address cybersecurity risks.
Our Managing Director, IT Security & Compliance, is a Certified Information Systems Security Professional (CISSP) with a Master's in Cybersecurity and Information Assurance (MS-CIA) from WGU, and additional certifications are in cybersecurity, networking, and other IT-related topics, and over 16 years of experience in cybersecurity.
Our Managing Director, IT Security & Compliance, is a Certified Information Systems Security Professional (CISSP) with a Master's in Cybersecurity and Information Assurance (MS-CIA) from WGU, with additional certifications in cybersecurity, networking, and other IT-related topics, and over 16 years of experience in cybersecurity.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our headquarters is located in leased offices in Westlake, Texas. The lease consists of approximately 230,000 square feet and expires in June 2031. As of December 31, 2023, our company-owned insurance brokerage business leases approximately 502,000 square feet of office space in Texas, Nevada, Colorado, Illinois, North Carolina, Florida, and Ohio under 14 leases.
Biggest changeItem 2. Properties Our headquarters is located in leased offices in Westlake, Texas. The lease consists of approximately 230,000 square feet and expires in June 2033. As of December 31, 2024, our company-owned insurance brokerage business leases approximately 481,000 square feet of office space in Texas, Nevada, Colorado, Illinois, North Carolina, Florida, Arizona and Ohio under 14 leases.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine safety disclosures Not applicable. 45 PART II
Biggest changeMine safety disclosures Not applicable. 46 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSales of Unregistered Securities None. 46 Subject to the terms of the amended and restated Goosehead Financial LLC Agreement, each LLC Unit is redeemable (along with the cancellation of the corresponding share of Class B common stock) for one share of Class A common stock Stock Performance Graph The following graph and table illustrate the total return from May 1, 2018 through December 31, 2023 for (i) our Class A common stock, (ii) the Standard and Poor's 500 Index, and (iii) the Russell 2000 Index, assuming an investment of $100 on May 1, 2018 including the reinvestment of dividends. 5/1/2018 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 GSHD $ 100 $ 178 $ 291 $ 865 $ 914 $ 241 $ 533 S&P 500 100 96 126 149 192 157 199 Russell 2000 100 88 111 133 153 121 142 Securities Authorized for Issuance Under Equity Incentive Plans The following table provides information about our compensation plans under which our Class A Common Stock is authorized for issuance, as of December 31, 2023: Number of securities to be issued upon exercise of outstanding options (in thousands) 2,946 Weighted-average exercise price of outstanding options 61.87 Number of securities remaining available for future issuances under equity compensation plans (in thousands) 3,462 Number of securities issued in connection with the Employee Stock Purchase Plan 53 Number of securities remaining available for future issuance in connection with the Employee Stock Purchase Plan 17 Issuer Purchases of Equity Securities None. 47 Use of Proceeds Not applicable.
Biggest changeSubject to the terms of the Amended and Restated Limited Liability Company Agreement of Goosehead Financial, LLC, dated as of May 1, 2018, each LLC Unit is redeemable (along with the cancellation of the corresponding share of Class B common stock) for one share of Class A common stock Stock Performance Graph The following graph and table illustrate the total return from May 1, 2018 through December 31, 2024 for (i) our Class A common stock, (ii) the Standard and Poor's 500 Index, and (iii) the Russell 2000 Index, assuming an investment of $100 on May 1, 2018 including the reinvestment of dividends. 5/1/2018 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 GSHD $ 100 $ 178 $ 291 $ 865 $ 914 $ 241 $ 533 $ 753 S&P 500 100 96 126 149 192 157 199 249 Russell 2000 100 88 111 133 153 121 142 158 48 Securities Authorized for Issuance Under Equity Incentive Plans The following table provides information about our compensation plans under which our Class A Common Stock is authorized for issuance, as of December 31, 2024: Number of securities to be issued upon exercise of outstanding options (in thousands) 3,263 Weighted-average exercise price of outstanding options 68.50 Number of securities remaining available for future issuances under equity compensation plans (in thousands) 4,242 Number of securities issued in connection with the Employee Stock Purchase Plan 60 Number of securities remaining available for future issuance in connection with the Employee Stock Purchase Plan 22 Issuer Purchases of Equity Securities Share repurchase activity during the three months ended December 31, 2024 was as follows (in thousands, except for average price paid per share): Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs October 1, 2024 - October 31, 2024 — $— — $36,837 November 1, 2024 - November 30, 2024 — $— — $36,837 December 1, 2024 - December 31, 2024 — $— — $36,837 Total — — (1) On April 24, 2024, our board of directors approved a share repurchase program with authorization to purchase up to $100 million of our Class A common stock through March 31, 2025 .
However, because we must pay taxes, make payments under the tax receivable agreement and pay our expenses, amounts ultimately distributed as dividends to holders of our Class A common stock are expected to be less than the amounts distributed by Goosehead Financial, LLC to the Pre-IPO LLC Members on a per share basis. See "Item 13.
However, because we must pay taxes and make payments under the tax receivable agreement, amounts ultimately distributed as dividends to holders of our Class A common stock are expected to be less than the amounts distributed by Goosehead Financial, LLC to the Pre-IPO LLC Members on a per share basis. See "Item 13.
Holders of Record As of January 31, 2024, there were 11 shareholders of record of our Class A common stock. The number of record holders does not include persons who held shares of our Class A common stock in nominee or "street name" accounts through brokers.
Holders of Record As of January 31, 2025, there were 6 shareholders of record of our Class A common stock. The number of record holders does not include persons who held shares of our Class A common stock in nominee or "street name" accounts through brokers.
The declaration and payment of any dividends by Goosehead Insurance, Inc. will be at the sole discretion of our board of directors, which may change our dividend policy at any time.
The declaration and payment of any dividends by Goosehead Insurance, Inc. is at the sole discretion of our board of directors, which may change our dividend policy at any time.
As of January 31, 2024, there were 45 shareholders of record of our Class B common stock.
As of January 31, 2025, there were 38 shareholders of record of our Class B common stock.
Added
On January 31, 2025, Goosehead Financial, LLC paid a special cash distribution of $175 million to holders of record of LLC Units, including us, as of the close of business on January 21, 2025.
Added
In addition, on January 31, 2025, a one-time special cash dividend of $5.91 per share of Class A common stock was paid to holders of record of our Class A 47 common stock as of the close of business on January 21, 2025. $1.22 of the special dividend was funded by cash received by us from prior tax distributions from Goosehead Financial, LLC that were in excess of the corporate income taxes payable by us.
Added
The remaining $4.69 of the special dividend was funded by the cash received by us from the distribution by Goosehead Financial, LLC. Sales of Unregistered Securities None.
Added
Use of Proceeds Not applicable. Item 6. Reserved 49

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThis decrease in net cash used for financing activities is due to the net repayment of $25.0 million of the revolving credit facility in 2022 and a $3.8 million increase in cash received from stock options exercises, offset by a $12.5 million increase in principal payments on notes payable, due primarily to an additional $10.0 million principal payment made in 2023, and a $10.9 million increase in member distributions paid during 2023.
Biggest changeThis increase in net cash used for financing activities was primarily driven by repurchases of our Class A common stock for $63.2 million and a $5.4 million increase in tax receivable agreement payments, offset by new borrowings under our term loan of $25.0 million, a $7.5 million decrease in payments on our term loan due to an additional $10 million principal payment made in 2023 offset by higher quarterly payments in 2024, and a $6.1 million decrease in member distributions. 62 Future sources and uses of liquidity Our sources of liquidity are (1) cash on hand, (2) net working capital, (3) cash flows from operations and (4) our Revolving Credit Facility or other sources of debt financing.
Premium by line of business We are a distributor of insurance policies in a range of primarily personal lines of business including homeowner’s insurance, automotive, dwelling property insurance, flood, wind and earthquake insurance, excess liability or umbrella insurance, specialty lines insurance (motorcycle, recreational vehicle, and other insurance), commercial lines insurance (general liability, property and auto insurance for small businesses) and life insurance.
Premium by line of business We are a distributor of insurance policies in a range of primarily personal lines of business including homeowner’s insurance; automotive insurance; dwelling property insurance; flood, wind and earthquake insurance; excess liability or umbrella insurance; specialty lines insurance (motorcycle, recreational vehicle, and other insurance); commercial lines insurance (general liability, property and auto insurance for small businesses) and life insurance.
Tax receivable agreement We entered into a tax receivable agreement with the Pre-IPO LLC Members on May 1, 2018 that provides for the payment by us 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 we actually realize as a result of (i) any increase in tax basis in Goosehead Insurance, Inc.’s assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement.
Tax receivable agreement We entered into the tax receivable agreement with the Pre-IPO LLC Members on May 1, 2018 that provides for the payment by us 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 we actually realize as a result of (i) any increase in tax basis in Goosehead Insurance, Inc.’s assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement.
General and administrative expenses include technology, travel, accounting, legal and other professional fees, commissions, placement fees, office expenses, depreciation and other costs associated with our operations. Our occupancy-related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations.
General and administrative expenses include technology, travel, accounting, legal and other professional fees, placement fees, office expenses, depreciation and other costs associated with our operations. Our occupancy-related costs and professional services expenses, in particular, generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations.
We were founded with one vision in mind—to provide consumers with superior insurance coverage at the best available price and in a timely manner. By leveraging our differentiated business model and innovative technology platform, we are able to deliver a superior insurance experience to our clients.
We were founded with one vision in mind—to provide clients with superior insurance coverage at the best available price and in a timely manner. By leveraging our differentiated business model and innovative technology platform, we are able to deliver a superior insurance experience to our clients.
Contingent commissions revenue is recognized over time as the Company completes its performance obligations as the underlying policies are placed and other contractual obligations are met. 63 Certain costs to obtain or fulfill a contract are capitalized. The Company capitalizes the incremental costs to obtain franchise contracts.
Contingent commissions revenue is recognized over time as the Company completes its performance obligations as the underlying policies are placed and other contractual obligations are met. Certain costs to obtain or fulfill a contract are capitalized. The Company capitalizes the incremental costs to obtain franchise contracts.
Because of the lower royalty fees on New Business Commissions as compared to Renewal Commissions, and because we are placing an increasing percentage of Total Written Premium in franchise sales, Core Revenue growth will lag that of Total Written Premium. 52 Cost Recovery Revenue: The Company charges every franchise an Initial Franchise Fee, which, on a cash flow basis, covers our costs to recruit, train, onboard, and support the franchise for the first year.
Because of the lower royalty fees on New Business Commissions as compared to Renewal Commissions, and because we are placing an increasing percentage of Total Written Premium in franchise sales, Core Revenue growth will lag that of Total Written Premium. 53 Cost Recovery Revenue: The Company charges every franchise an Initial Franchise Fee, which, on a cash flow basis, covers our costs to recruit, train, onboard, and support the franchise for the first year.
We also incur expenses as a public company, including public reporting obligations, proxy statements, stockholder meetings, stock exchange fees and transfer agent fees. 50 Effects of the reorganization on our corporate structure Goosehead Insurance, Inc. was formed for the purpose of the Offering and has engaged to date only in activities related to Goosehead Financial, LLC.
We also incur expenses as a public company, including public reporting obligations, proxy statements, stockholder meetings, stock exchange fees and transfer agent fees. 51 Effects of the reorganization on our corporate structure Goosehead Insurance, Inc. was formed for the purpose of the Offering and has engaged to date only in activities related to Goosehead Financial, LLC.
GAAP, and these provide a measure against which our businesses may be assessed in the future. Our methods of calculating these measures may differ from those used by other companies and therefore comparability may be limited. These financial measures should be viewed in addition to, not in lieu of, the consolidated financial statements for the year ended December 31, 2023.
GAAP, and these provide a measure against which our businesses may be assessed in the future. Our methods of calculating these measures may differ from those used by other companies and therefore comparability may be limited. These financial measures should be viewed in addition to, not in lieu of, the consolidated financial statements for the year ended December 31, 2024.
We will continue to market actively for new franchises in our established markets, which represent over 99% of the U.S. population. We are now licensed with the necessary state departments of commerce and insurance and registered as a franchisor in all 50 states in the U.S. • Continued retention of existing Book of Business.
We will continue to market actively for new franchises in our established markets, which represent over 98% of the U.S. population. We are now licensed with the necessary state departments of commerce and insurance and registered as a franchisor in all 50 states in the U.S. • Continued retention of existing Book of Business.
All clients are serviced by our world-class service centers, allowing for predictable retention of our Book of Business, which has historically been 86%. All commissions received in corporate sales after the first term of the policy are recognized as Renewal Commissions, which are higher margin due to lower commissions and servicing costs.
All clients are serviced by our world-class service centers, allowing for predictable retention of our Book of Business, which has historically been 84%. All commissions received in corporate sales after the first term of the policy are recognized as Renewal Commissions, which are higher margin due to lower commissions and servicing costs.
These fees are fully 51 earned and non-refundable when a franchise attends our initial training and are recognized in revenue over the life of the franchise agreement. • Interest Income - like Initial Franchise Fees, interest income is a Cost Recovery Revenue stream that reimburses the Company for those franchises on a payment plan.
These fees are fully 52 earned and non-refundable when a franchise attends our initial training and are recognized in revenue over the life of the franchise agreement. • Interest Income - like Initial Franchise Fees, interest income is a Cost Recovery Revenue stream that reimburses the Company for those franchises on a payment plan.
Adjusted EPS Adjusted EPS is a supplemental measure of our performance, defined as earnings per share (the most directly comparable GAAP measure) before non-recurring or non-operating income and expenses, adjusted to assume a single class of stock (Class A) and assuming non-controlling interest does not exist.
Adjusted EPS Adjusted EPS is a supplemental measure of our performance, defined as earnings per share (the most directly comparable GAAP measure) before non-recurring or non-operating income and expenses, adjusted to assume a single class of stock (Class A) and assuming noncontrolling interest does not exist.
For further discussion regarding our consolidated results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021, refer to "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
For further discussion regarding our consolidated results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022, refer to "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
The following discussion contains references to the years ended December 31, 2023, December 31, 2022, and December 31, 2021. See Goosehead’s Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the changes from year ended December 31, 2021 to the year ended December 31, 2022.
The following discussion contains references to the years ended December 31, 2024, December 31, 2023, and December 31, 2022. See Goosehead’s Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of the changes from year ended December 31, 2022 to the year ended December 31, 2023.
These deferred costs are amortized over the expected life of the underlying franchise fee and are included in Other assets in the Company's consolidated balance sheet as of December 31, 2023.
These deferred costs are amortized over the expected life of the underlying franchise fee and are included in Other assets in the Company's consolidated balance sheet as of December 31, 2024.
As of December 31, 2023, our unrestricted cash and cash equivalents, and restricted cash was $44.0 million. We have used cash flow from operations primarily to pay compensation and related expenses, general, administrative and other expenses, and debt service. Credit agreement See "Note 9. Debt" in the consolidated financial statements included herein for a discussion of the Company's credit facilities.
As of December 31, 2024, our unrestricted cash and cash equivalents, and restricted cash was $58.0 million. We have used cash flow from operations primarily to pay compensation and related expenses; general, administrative and other expenses; and debt service. Credit agreement See "Note 9. Debt" in the consolidated financial statements included herein for a discussion of the Company's credit facilities.
No impairment was recorded for the years ended December 31, 2022 and December 31, 2021. Consolidated results of operations The following is a discussion of our consolidated results of operations for each of the years ended December 31, 2023, 2022, and 2021. This information is derived from our accompanying consolidated financial statements prepared in accordance with GAAP.
No impairment was recorded for the year ended December 31, 2022. Consolidated results of operations The following is a discussion of our consolidated results of operations for each of the years ended December 31, 2024, 2023, and 2022. This information is derived from our accompanying consolidated financial statements prepared in accordance with GAAP.
We historically accounted, and anticipate that we will continue to account for the effects of these increases in tax basis and associated payments under the tax receivable agreement arising from redemptions or exchanges as follows: • we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the redemption or exchange; • to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we will reduce the deferred tax asset with a valuation allowance; and • we will record 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement and the remaining 15% of the estimated realizable tax benefit as an increase to additional paid-in capital. 62 All of the effects of changes in any of our estimates after the date of the redemption or exchange will be included in net income.
We historically accounted, and anticipate that 63 we will continue to account for the effects of these increases in tax basis and associated payments under the tax receivable agreement arising from redemptions or exchanges as follows: • we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the redemption or exchange; • to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we will reduce the deferred tax asset with a valuation allowance; and • we will record 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement and the remaining 15% of the estimated realizable tax benefit as an increase to additional paid-in capital.
Adjusted EBITDA Margin Adjusted EBITDA Margin is Adjusted EBITDA as defined above, divided by total revenue excluding other non-operating items. Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level. For the year ended December 31, 2023, Adjusted EBITDA Margin was 27% compared to 18% for the year ended December 31, 2022.
Adjusted EBITDA Margin Adjusted EBITDA Margin is Adjusted EBITDA as defined above, divided by total revenue excluding other non-operating items. Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level. For the year ended December 31, 2024, Adjusted EBITDA Margin was 32% compared to 27% for the year ended December 31, 2023.
The following table shows Total Written Premium by channel for the years ended 2023 and 2022 (in thousands) .
The following table shows Total Written Premium by channel for the years ended 2024 and 2023 (in thousands) .
Note that totals may not sum due to rounding: Year ended December 31, 2023 2022 2021 Earnings per share - basic (GAAP) $ 0.59 $ 0.03 $ 0.28 Add: equity-based compensation (1) 0.64 0.52 0.20 Add: impairment expense (2) 0.10 — — Adjusted EPS (non-GAAP) $ 1.33 $ 0.55 $ 0.48 (1) Calculated as equity-based compensation divided by the sum of the weighted average number of shares of Class A common stock and Class B common stock outstanding during the period 2023 - [$24.0 million / ( 23.9 million + 13.8 million )] 2022 - [ $19.6 million / ( 21.0 million + 16.2 million )] 2021 - [ $7.3 million / ( 19.2 million + 17.7 million )] (2) Calculated as impairment expense divided by the sum of the weighted average number of shares of Class A common stock and Class B common stock [ $3.6 million / (23.9 million + 13.8 million )] for the year ended December 31, 2023.
Note that totals may not sum due to rounding: Year ended December 31, 2024 2023 2022 Earnings per share - basic (GAAP) $ 1.23 $ 0.59 $ 0.03 Add: equity-based compensation (1) 0.75 0.64 0.52 Add: impairment expense (2) 0.01 0.10 — Adjusted EPS (non-GAAP) $ 1.99 $ 1.33 $ 0.55 (1) Calculated as equity-based compensation divided by the sum of the weighted average number of shares of Class A common stock and Class B common stock outstanding during the period 2024 - [$28.0 million / ( 24.7 million + 12.7 million )] 2023 - [ $24.0 million / ( 23.9 million + 13.8 million )] 2022 - [ $19.6 million / ( 21.0 million + 16.2 million )] (2) Calculated as impairment expense divided by the sum of the weighted average number of shares of Class A common stock and Class B common stock [ $0.3 million / ( 24.7 million + 12.7 million )] for the year ended December 31, 2024 and [ $3.6 million / ( 23.9 million + 13.8 million )].
Since 2021, revenue from Contingent Commissions have historically represented approximately 0.48% of Total Written Premium at year-end. Most of our Contingent Commissions are earned in the year prior to when they are received.
Since 2022, revenue from Contingent Commissions have historically represented approximately 0.54% of Total Written Premium at year-end. Most of our Contingent Commissions are earned in the year prior to when they are received.
We believe that Total Written Premium is an appropriate measure of operating performance because it reflects growth of our business relative to other insurance agencies. For the year ended December 31, 2023, we had $3.0 billion in Total Written Premium, representing a 34% increase, compared to $2.2 billion for the year ended December 31, 2022.
We believe that Total Written Premium is an appropriate measure of operating performance because it reflects growth of our business relative to other insurance agencies. For the year ended December 31, 2024, we had $3.8 billion in Total Written Premium, representing a 29% increase, compared to $3.0 billion for the year ended December 31, 2023.
In addition to monthly lease payments, the lease agreements require the Company to reimburse the lessors for its portion of operating costs each year. Rent expense was $7.8 million, $7.0 million, and $4.8 million for year ending December 31, 2023, 2022, and 2021.
In addition to monthly lease payments, the lease agreements require the Company to reimburse the lessors for its portion of operating costs each year. Rent expense was $7.5 million, $7.8 million, and $7.0 million for years ending December 31, 2024, 2023, and 2022.
We believe that Policies in Force is an appropriate measure of operating performance because it reflects growth of our business relative to other insurance agencies. As of December 31, 2023, we had 1,486,000 Policies in Force compared to 1,284,000 as of December 31, 2022, representing a 16% increase.
We believe that Policies in Force is an appropriate measure of operating performance because it reflects growth of our business relative to other insurance agencies. As of December 31, 2024, we had 1,674,000 Policies in Force compared to 1,486,000 as of December 31, 2023, representing a 13% increase.
Commissions and agency fees Commissions and agency fees consist of Core Revenue from New Business Commissions, Renewal Commissions, and Agency Fees, and Ancillary Revenue from Contingent Commissions generated from corporate sales and franchise sales and other income.
Commissions and agency fees Commissions and agency fees consist of Core Revenue from New Business Commissions, Renewal Commissions, and Agency Fees, and Ancillary Revenue from Contingent Commissions generated from corporate sales.
This increase in net cash used in business investment activities was primarily attributable to $6.9 million for purchases of books of business in 2023 and a $5.2 million increase in cash paid for software development offset by $5.7 million decrease in the purchase of property and equipment.
This decrease in net cash used in business investment activities was primarily attributable to a $6.9 million decrease in purchases of books of business and a $3.5 million decrease in cash purchases of property and equipment offset by a $3.5 million increase in cash paid for software development.
For all policies that renew related to franchise sales, we receive as Renewal Royalty Fees 50% of the commissions received from the Carrier, creating a mechanical increase in revenue of 129% if we renew at historical rates. Renewal Royalty Fees are higher margin compared to New Business Royalty Fees due to lower servicing costs on higher revenue.
For all policies that renew related to franchise sales, we receive as Renewal Royalty Fees 50% of the commissions received from the Carrier, creating a mechanical increase in revenue of 150% in the first renewal term. Renewal Royalty Fees are higher margin compared to New Business Royalty Fees due to lower servicing costs on higher revenue.
Revenue from Contingent Commissions increased by $6.1 million, or 79%, to $13.7 million for the year ended December 31, 2023, from $7.7 million for the year ended December 31, 2022. The increase is primarily attributable to growth in total written premiums as well as receiving and qualifying for additional contingent commissions.
Revenue from Contingent Commissions increased by $17.6 million, or 128%, to $31.4 million for the year ended December 31, 2024, from $13.7 million for the year ended December 31, 2023. The increase is primarily attributable to growth in total written premiums as well as receiving and qualifying for additional Contingent Commissions.
Furthermore, payments under the tax receivable agreement give rise to additional tax benefits and therefore additional payments under the tax receivable agreement itself. See "Item 13. Certain relationships and related transactions, and director independence". Certain income statement line items Revenues In 2023, revenue increased by 25% to $261.3 million from $209.4 million in 2022.
Furthermore, payments under the tax receivable agreement give rise to additional tax benefits and therefore additional payments under the tax receivable agreement itself. See "Item 13. Certain relationships and related transactions, and director independence". Certain income statement line items Revenues In 2024, revenue increased by 20% to $314.5 million from $261.3 million in 2023.
Total Written Premium growth, which is the best indicator of future revenue growth, increased 34% to $3.0 billion in 2023 from $2.2 billion in 2022. Total Written Premiums Placed drive our current and future Core Revenue and gives us potential opportunities to earn Ancillary Revenue in the form of Contingent Commissions.
Total Written Premium growth, which is the best indicator of future revenue growth, increased 29% to $3.8 billion in 2024 from $3.0 billion in 2023. Total Written Premiums Placed drive our current and future Core Revenue and give us potential opportunities to earn Ancillary Revenue in the form of Contingent Commissions.
For the year ended December 31, 2021, $9.9 million of Contingent Commissions were earned (above our historical average as a percentage of premium), of which $7.4 million was still receivable at December 31, 2021.
For the year ended December 31, 2024, $31.4 million of Contingent Commissions were earned (above our historical average as a percentage of premium), of which $25.5 million was still receivable at December 31, 2024.
Franchise Revenues Franchise Revenues consist of Core Revenues from Royalty Fees, Cost Recovery Revenues from Initial Franchise Fees, and Ancillary Revenues from Interest Income.
Franchise Revenues Franchise Revenues consist of Core Revenues from Royalty Fees, Cost Recovery Revenues from Initial Franchise Fees, and Ancillary Revenues from Other Franchise Revenues.
As of December 31, 2023, as a result of the prior redemptions of LLC Units, we recognized liabilities totaling $149.3 million relating to our obligations under the Tax Receivable Agreement.
As of December 31, 2024, as a result of the prior redemptions of LLC Units, we recognized liabilities totaling $160.1 million relating to our obligations under the tax receivable agreement. 65
We believe Client Retention is useful as a measure of how well Goosehead retains clients year-over-year and minimizes defections. Client Retention decreased modestly to 86% at December 31, 2023 when compared to 88% at December 31, 2022, again driven by the service team’s continued focus on delivering highly differentiated service levels.
We believe Client Retention is useful as a measure of how well Goosehead retains clients year-over-year and minimizes defections. Client Retention decreased modestly to 84% at December 31, 2024 when compared to 86% at December 31, 2023, impacted modestly by premium rate increases yet supported by the service team’s continued focus on delivering highly differentiated service levels.
We believe that Core Revenue is an appropriate measure of operating performance because it summarizes all of our revenues from sales of individual insurance policies. Core Revenue increased by $44.8 million, or 24%, to $233.0 million for the year ended December 31, 2023 from $188.2 million for the year ended December 31, 2022.
We believe that Core Revenue is an appropriate measure of operating performance because it summarizes all of our revenues from sales of individual insurance policies. Core Revenue increased by $40.7 million, or 17%, to $273.7 million for the year ended December 31, 2024 from $233.0 million for the year ended December 31, 2023.
Revenue from New Business Royalty Fees increased by $4.9 million, or 27%, to $23.2 million for the year ended December 31, 2023 from $18.2 million for the year ended December 31, 2022. The increase in revenue from New Business Royalty Fees was driven primarily by an increase in agency productivity and rising premium rates.
Revenue from New Business Royalty Fees increased by $4.0 million, or 17%, to $27.1 million for the year ended December 31, 2024 from $23.2 million for the year ended December 31, 2023. The increase in revenue from New Business Royalty Fees was driven primarily by an increase in New Business Production per Agency and rising premium rates.
(2) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue excluding other non-operating items ($69,818 / $261,276) for the year ended December 31, 2023, ($36,654 / $209,390) for the year ended December 31, 2022, and ($20,838 /$151,312) for the year ended December 31, 2021. 57 The following tables show a reconciliation from basic earnings per share to Adjusted EPS for the years ended December 31, 2023, 2022, and 2021.
(2) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue excluding other non-operating items ($99,911 / $314,505) for the year ended December 31, 2024, ($69,817 / $261,276) for the year ended December 31, 2023, and ($36,654 /$209,390) for the year ended December 31, 2022. 58 The following tables show a reconciliation from basic earnings per share to Adjusted EPS for the years ended December 31, 2024, 2023, and 2022.
This decrease was primarily attributable to an increase in average cash collections relative to revenue recognized for terminated franchises on the payment plan. Depreciation and amortization Depreciation and amortization increased by $2.4 million, or 34%, to $9.2 million for 2023 from $6.9 million for 2022.
This decrease was primarily attributable to lower franchise turnover and an increase in average cash collections relative to revenue recognized for terminated franchises on the payment plan. Depreciation and amortization Depreciation and amortization increased by $1.2 million, or 13%, to $10.5 million for 2024 from $9.2 million for 2023.
The following table sets forth our Total Written Premium placed by line of business by amount and as a percentage of our Total Written Premium for the periods indicated ( in thousands ): Year Ended December 31, 2023 2022 2021 Line of business Homeowner $ 1,729,138 58 % $ 1,268,217 57 % $ 885,130 56 % Automotive 1,149,737 39 % 874,505 40 % 618,483 40 % Commercial 57,207 2 % 49,582 2 % 39,254 3 % Other 27,903 1 % 24,719 1 % 16,991 1 % Total Written Premium $ 2,963,985 100 % $ 2,217,023 100 % $ 1,559,858 100 % 53 Expenses Due to our organic-focused growth strategy, virtually all of our investments in future growth are in people and certain technologies.
The following table sets forth our Total Written Premium placed by line of business by amount and as a percentage of our Total Written Premium for the periods indicated ( in thousands ): Year Ended December 31, 2024 2023 2022 Line of business Homeowner $ 2,338,616 61 % $ 1,729,138 58 % $ 1,268,217 57 % Automotive 1,367,578 36 % 1,149,737 39 % 874,505 40 % Commercial 72,804 2 % 57,207 2 % 49,582 2 % Other 32,994 1 % 27,903 1 % 24,719 1 % Total Written Premium $ 3,811,992 100 % $ 2,963,985 100 % $ 2,217,023 100 % 54 Expenses Due to our organic-focused growth strategy, virtually all of our investments in future growth are in people and technology.
The following table shows a reconciliation from net income to Adjusted EBITDA for the years ended December 31, 2023, 2022, and 2021 (in thousands) : Year ended December 31, 2023 2022 2021 Net income $ 23,696 $ 2,630 $ 8,296 Interest expense 6,568 4,999 2,854 Depreciation and amortization 9,244 6,884 4,873 Tax expense (benefit) 2,692 2,499 (2,292) Equity-based compensation 23,989 19,642 7,292 Impairment expense 3,628 — — Other (income) expense — — (185) Adjusted EBITDA $ 69,817 $ 36,654 $ 20,838 Net Income Margin (1) 9 % 1 % 5 % Adjusted EBITDA Margin (2) 27 % 18 % 14 % (1) Net Income Margin is calculated as Net Income divided by Total Revenue ($23,696 / $261,276), ($2,630 / $209,390), and ($8,296 / $151,312) for the years ended December 31, 2023, 2022, and 2021.
The following table shows a reconciliation from net income to Adjusted EBITDA for the years ended December 31, 2024, 2023, and 2022 (in thousands) : Year ended December 31, 2024 2023 2022 Net income $ 49,113 $ 23,696 $ 2,630 Interest expense 7,339 6,568 4,999 Depreciation and amortization 10,453 9,244 6,884 Tax expense (benefit) (2,413) 2,692 2,499 Equity-based compensation 27,971 23,989 19,642 Impairment expense 347 3,628 — Other (income) expense 7,101 — — Adjusted EBITDA $ 99,911 $ 69,817 $ 36,654 Net Income Margin (1) 16 % 9 % 1 % Adjusted EBITDA Margin (2) 32 % 27 % 18 % (1) Net Income Margin is calculated as Net Income divided by Total Revenue ($49,113 / $314,505), ($23,696 / $261,276), and ($2,630 / $209,390) for the years ended December 31, 2024, 2023, and 2022.
Total Written Premium Contingent Commission Revenue % of Premium 2021 $ 1,559,858 $ 9,926 0.64 % 2022 2,217,023 7,684 0.35 % 2023 2,963,984 13,746 0.46 % 3-year average 0.48 % Contingent Commissions can vary significantly from year-to-year and should be viewed over several years.
Total Written Premium Contingent Commission Revenue % of Premium 2022 $ 2,217,023 $ 7,684 0.35 % 2023 2,963,984 13,746 0.46 % 2024 3,811,992 31,385 0.82 % 3-year average 0.54 % Contingent Commissions can vary significantly from year-to-year and should be viewed over several years.
The following table sets forth our commissions and agency fees by amount and as a percentage of our revenues for the periods indicated ( in thousands ): Year Ended December 31, 2023 2022 2021 Core Revenue: Renewal Commissions $ 70,730 61 % $ 57,543 57 % $ 39,111 47 % New Business Commissions 23,411 20 % 24,126 24 % 22,108 27 % Agency Fees 8,174 7 % 10,912 11 % 11,506 14 % Total 102,315 88 % 92,581 92 % 72,725 88 % Ancillary Revenue: Contingent Commissions 13,746 12 % 7,684 8 % 9,926 12 % Commissions and agency fees $ 116,061 100 % $ 100,265 100 % $ 82,651 100 % Renewal Commissions increased by $13.2 million, or 23%, to $70.7 million for the year ended December 31, 2023 from $57.5 million for the year ended December 31, 2022.
The following table sets forth our commissions and agency fees by amount and as a percentage of our revenues for the periods indicated ( in thousands ): Year Ended December 31, 2024 2023 2022 Core Revenue: Renewal Commissions $ 74,938 54 % $ 70,730 61 % $ 57,543 57 % New Business Commissions 24,608 18 % 23,411 20 % 24,126 24 % Agency Fees 8,127 6 % 8,174 7 % 10,912 11 % Total 107,673 77 % 102,315 88 % 92,581 92 % Ancillary Revenue: Contingent Commissions 31,385 23 % 13,746 12 % 7,684 8 % Commissions and agency fees $ 139,059 100 % $ 116,061 100 % $ 100,265 100 % Renewal Commissions increased by $4.2 million, or 6%, to $74.9 million for the year ended December 31, 2024 from $70.7 million for the year ended December 31, 2023.
The following table sets forth our franchise revenues by amount and as a percentage of our revenues for the periods indicated ( in thousands ): Year Ended December 31, 2023 2022 2021 Core Revenues: Renewal Royalty Fees $ 107,524 75 % $ 77,346 72 % $ 46,079 68 % New Business Royalty Fees 23,168 16 % 18,244 17 % 14,616 22 % Total 130,692 91 % 95,590 89 % 60,695 90 % Cost Recovery Revenues: Initial Franchise Fees 11,238 8 % 10,853 10 % 6,516 10 % Ancillary Revenues: Other Franchise Revenues 1,843 1 % 1,279 1 % 297 — % Franchise revenues $ 143,772 100 % $ 107,722 100 % $ 67,508 100 % 59 Revenue from Renewal Royalty Fees increased by $30.2 million, or 39%, to $107.5 million, for the year ended December 31, 2023 from $77.3 million for the year ended December 31, 2022.
The following table sets forth our franchise revenues by amount and as a percentage of our revenues for the periods indicated ( in thousands ): Year Ended December 31, 2024 2023 2022 Core Revenues: Renewal Royalty Fees $ 138,942 80 % $ 107,524 75 % $ 77,346 72 % New Business Royalty Fees 27,122 16 % 23,168 16 % 18,244 17 % Total 166,064 96 % 130,692 91 % 95,590 89 % Cost Recovery Revenues: Initial Franchise Fees 6,620 4 % 11,238 8 % 10,853 10 % Ancillary Revenues: Other Franchise Revenues 1,831 1 % 1,843 1 % 1,279 1 % Franchise revenues $ 174,514 100 % $ 143,772 100 % $ 107,722 100 % 60 Revenue from Renewal Royalty Fees increased by $31.4 million, or 29%, to $138.9 million, for the year ended December 31, 2024 from $107.5 million for the year ended December 31, 2023.
Therefore, the majority of our investments are not capitalizable and are recognized immediately on our statement of operations. Employee compensation and benefits. Employee compensation and benefits is our largest expense and consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, and (b) stock option awards for our senior employees.
Employee compensation and benefits is our largest expense and consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, and (b) stock option awards for our senior employees.
While this can impact month-to-month or quarter-to-quarter results, we expect productivity to normalize year-over-year. • Increases in interest rates. Our variable rate debt, including our Credit Agreement, exposes us to interest rate risk.
While this can impact month-to-month or quarter-to-quarter results, we expect productivity to normalize year-over-year. • Increases in interest rates. Our variable rate debt, including our Credit Agreement, exposes us to interest rate risk. If interest rates were to increase, our debt service obligations on our variable rate indebtedness would increase even if the amount borrowed remained the same.
We discuss below the breakdown of our revenue by stream: Years ended December 31, 2023 (in thousands) 2023 2022 2021 % Growth Core Revenue: Renewal Commissions (1) $ 70,730 27 % $ 57,543 27 % $ 39,111 26 % 23 % Renewal Royalty Fees (2) 107,524 41 % 77,346 37 % 46,079 30 % 39 % New Business Commissions (1) 23,411 9 % 24,126 12 % 22,108 15 % (3) % New Business Royalty Fees (2) 23,168 9 % 18,244 9 % 14,616 10 % 27 % Agency Fees (1) 8,174 3 % 10,912 4 % 11,506 7 % (25) % Total Core Revenue 233,007 89 % 188,171 89 % 133,420 88 % 24 % Cost Recovery Revenue: Initial Franchise Fees (2) 11,238 4 % 10,853 5 % 6,516 4 % 4 % Interest Income 1,443 1 % 1,403 1 % 1,153 1 % 3 % Total Cost Recovery Revenue 12,681 5 % 12,256 6 % 7,669 6 % 3 % Ancillary Revenue: Contingent Commissions (1) 13,746 5 % 7,684 4 % 9,926 7 % 79 % Other Income (2) 1,843 1 % 1,279 1 % 297 — % 44 % Total Ancillary Revenue 15,588 6 % 8,963 5 % 10,223 7 % 74 % Total Revenues $ 261,276 100 % $ 209,390 100 % $ 151,312 100 % 25 % (1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Consolidated statements of operations.
We discuss below the breakdown of our revenue by stream: Years ended December 31, 2024 (in thousands) 2024 2023 2022 % Growth Core Revenue: Renewal Commissions (1) $ 74,938 24 % $ 70,730 27 % $ 57,543 27 % 6 % Renewal Royalty Fees (2) 138,942 44 % 107,524 41 % 77,346 37 % 29 % New Business Commissions (1) 24,608 8 % 23,411 9 % 24,126 12 % 5 % New Business Royalty Fees (2) 27,122 9 % 23,168 9 % 18,244 9 % 17 % Agency Fees (1) 8,127 3 % 8,174 3 % 10,912 4 % (1) % Total Core Revenue 273,737 87 % 233,007 89 % 188,171 89 % 17 % Cost Recovery Revenue: Initial Franchise Fees (2) 6,620 2 % 11,238 4 % 10,853 5 % (41) % Interest Income 932 — % 1,443 1 % 1,403 1 % (35) % Total Cost Recovery Revenue 7,552 2 % 12,681 5 % 12,256 6 % (40) % Ancillary Revenue: Contingent Commissions (1) 31,385 10 % 13,746 5 % 7,684 4 % 128 % Other Income (2) 1,831 1 % 1,843 1 % 1,279 1 % (1) % Total Ancillary Revenue 33,216 11 % 15,588 6 % 8,963 5 % 113 % Total Revenues $ 314,505 100 % $ 261,276 100 % $ 209,390 100 % 20 % (1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Consolidated statements of operations.
The following table summarizes our results of operations for the years ended December 31, 2023, 2022, and 2021 (in thousands) : Year Ended December 31, 2023 2022 2021 Revenues: Commissions and agency fees $ 116,061 44 % $ 100,265 48 % $ 82,651 54 % Franchise revenues 143,772 55 % 107,722 51 % 67,508 45 % Interest income 1,443 1 % 1,403 1 % 1,153 1 % Total revenues 261,276 100 % 209,390 100 % 151,312 100 % Operating Expenses: Employee compensation and benefits 152,604 67 % 133,293 67 % 94,978 67 % General and administrative expenses 62,111 27 % 52,887 27 % 39,789 28 % Bad debts 4,361 2 % 6,198 3 % 2,999 2 % Depreciation and amortization 9,244 4 % 6,884 3 % 4,873 3 % Total operating expenses 228,320 100 % 199,262 100 % 142,639 100 % Income from operations 32,956 10,128 8,673 Other Income: Other income — — 185 Interest expense (6,568) (4,999) (2,854) Income before taxes 26,388 5,129 6,004 Tax expense (benefit) 2,692 2,499 (2,292) Net Income 23,696 2,630 8,296 Less: net income attributable to non-controlling interests 9,556 2,065 2,893 Net Income attributable to Goosehead Insurance Inc. $ 14,140 $ 565 $ 5,403 58 Revenues In 2023, revenue increased by 25% to $261.3 million from $209.4 million in 2022.
The following table summarizes our results of operations for the years ended December 31, 2024, 2023, and 2022 (in thousands) : Year Ended December 31, 2024 2023 2022 Revenues: Commissions and agency fees $ 139,059 44 % $ 116,061 44 % $ 100,265 48 % Franchise revenues 174,514 56 % 143,772 55 % 107,722 51 % Interest income 932 — % 1,443 1 % 1,403 1 % Total revenues 314,505 100 % 261,276 100 % 209,390 100 % Operating Expenses: Employee compensation and benefits 172,942 68 % 152,604 67 % 133,293 67 % General and administrative expenses 67,069 27 % 62,111 27 % 52,887 27 % Bad debts 2,901 1 % 4,361 2 % 6,198 3 % Depreciation and amortization 10,453 4 % 9,244 4 % 6,884 3 % Total operating expenses 253,365 100 % 228,320 100 % 199,262 100 % Income from operations 61,140 32,956 10,128 Other Income: Interest expense (7,339) (6,568) (4,999) Other (expense) income, net (7,101) — — Income before taxes 46,700 26,388 5,129 Tax expense (benefit) (2,413) 2,692 2,499 Net Income 49,113 23,696 2,630 Less: net income attributable to noncontrolling interests 18,687 9,556 2,065 Net Income attributable to Goosehead Insurance, Inc. $ 30,426 $ 14,140 $ 565 59 Revenues In 2024, revenue increased by 20% to $314.5 million from $261.3 million in 2023.
Comparative cash flows The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated: Year Ended December 31 2023 2022 2021 Net cash provided by operating activities $ 50,758 $ 35,724 $ 35,444 Net cash used for investing activities (19,182) (12,571) (15,375) Net cash used for financing activities (17,916) (23,245) (15,826) Net increase (decrease) in cash and cash equivalents 13,660 (92) 4,243 Cash and cash equivalents, and restricted cash, beginning of period 30,387 30,479 26,236 Cash and cash equivalents, and restricted cash, end of period $ 44,047 $ 30,387 $ 30,479 Operating activities Net cash provided by operating activities was $50.8 million for 2023 as compared to net cash provided by operating activities of $35.7 million for 2022.
Comparative cash flows The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated: Year Ended December 31 2024 2023 2022 Net cash provided by operating activities $ 71,544 $ 50,833 $ 36,033 Net cash used for investing activities (12,419) (19,182) (12,571) Net cash used for financing activities (45,199) (17,991) (23,554) Net increase (decrease) in cash and cash equivalents 13,926 13,660 (92) Cash and cash equivalents, and restricted cash, beginning of period 44,047 30,387 30,479 Cash and cash equivalents, and restricted cash, end of period $ 57,973 $ 44,047 $ 30,387 Operating activities Net cash provided by operating activities was $71.5 million for 2024 as compared to net cash provided by operating activities of $50.8 million for 2023.
Financial Highlights for 2023: • Total revenue increased 25% from 2022 to $261.3 million; Core Revenues*, a non-GAAP measure, of $233.0 million increased 24% over 2022 • Total Written Premiums Placed increased 34% from 2022 to $3.0 billion • Net income increased by $21.1 million from 2022 to $23.7 million, or 9% of total revenues • Adjusted EBITDA*, a non-GAAP measure, increased by 90% from 2022 to $69.8 million, or 27% of total revenues • Basic earnings per share was $0.59 and Adjusted EPS*, a non-GAAP measure, was $1.33 for the year ended December 31, 2023. • Policies in Force increased 16% from December 31, 2022 to 1,486,000 at December 31, 2023. • Corporate sales headcount decreased 6% from December 31, 2022 to 300 at December 31, 2023. ◦ As of December 31, 2023, 135 of these corporate sales agents had less than one year of tenure and 165 had greater than one year of tenure. • Operating franchises decreased 13% from December 31, 2022 to 1,226 at December 31, 2023. ◦ As of December 31, 2023, 183 operating franchises had less than one year of tenure and 1,043 operating franchisees had greater than one year of tenure. 49 *Core Revenue, Adjusted EBITDA and Adjusted EPS are non-GAAP measures.
Financial Highlights for 2024: • Total revenue increased 20% from 2023 to $314.5 million; Core Revenues*, a non-GAAP measure, of $273.7 million increased 17% over 2023 • Total Written Premiums Placed increased 29% from 2023 to $3.8 billion • Net income increased by $25.4 million from 2023 to $49.1 million, or 16% of total revenues • Adjusted EBITDA*, a non-GAAP measure, increased by 43% from 2023 to $99.9 million, or 32% of total revenues • Basic earnings per share was $1.23 and Adjusted EPS*, a non-GAAP measure, was $1.99 for the year ended December 31, 2024. • Policies in Force increased 13% from December 31, 2023 to 1,674,000 at December 31, 2024. • Corporate sales headcount increased 39% from December 31, 2023 to 417 at December 31, 2024. ◦ As of December 31, 2024, 253 of these corporate sales agents had less than one year of tenure and 164 had greater than one year of tenure. • Operating franchises decreased 10% from December 31, 2023 to 1,103 at December 31, 2024. ◦ As of December 31, 2024, 90 operating franchises had less than one year of tenure and 1,013 operating franchisees had greater than one year of tenure. 50 *Core Revenue, Adjusted EBITDA and Adjusted EPS are non-GAAP measures.
NPS has increased modestly to 92 as of December 31, 2023 from 90 at December 31, 2022, primarily driven by the service team’s continued focus on delivering highly differentiated service levels. 54 Client Retention Client Retention is calculated by comparing the number of all clients that had at least one policy in force twelve months prior to the date of measurement and still have at least one policy in force at the date of measurement.
NPS has decreased modestly to 89 as of December 31, 2024 from 92 at December 31, 2023, primarily driven by rapid premium increases offset by our service team's consistent delivery. 55 Client Retention Client Retention is calculated by comparing the number of all clients that had at least one policy in force twelve months prior to the date of measurement and still have at least one policy in force at the date of measurement.
Revenue recognition Goosehead provides personal and commercial property and casualty insurance brokerage services for its clients through a network of corporate-owned offices and franchise units. Goosehead is compensated for the insurance brokerage services that it provides for clients in the form of commission revenue, agency fees, royalty fees, and contingent commissions.
Revenue recognition Goosehead provides personal and commercial property and casualty insurance brokerage services for its clients through a network of corporate-owned offices and franchise units.
Adjusted EPS increased by $0.78 to $1.33 for the year ended December 31, 2023, from $0.55 for the year ended December 31, 2022, driven by a significant increase in Core Revenue and slower growth in both employee compensation and benefits and general and administrative expenses. 56 GAAP to Non-GAAP Reconciliations The following table shows a reconciliation of total revenues to other non-GAAP measures of revenue for the years ended December 31, 2023, 2022, and 2021 (in thousands) : Year ended December 31, 2023 2022 2021 Total Revenues $ 261,276 $ 209,390 $ 151,312 Core Revenue: Renewal Commissions (1) $ 70,730 $ 57,543 $ 39,111 Renewal Royalty Fees (2) 107,524 77,346 46,079 New Business Commissions (1) 23,411 24,126 22,108 New Business Royalty Fees (2) 23,168 18,244 14,616 Agency Fees (1) 8,174 10,912 11,506 Total Core Revenue 233,007 188,171 133,420 Cost Recovery Revenue: Initial Franchise Fees (2) 11,238 10,853 6,516 Interest Income 1,443 1,403 1,153 Total Cost Recovery Revenue 12,681 12,256 7,669 Ancillary Revenue: Contingent Commissions (1) 13,746 7,684 9,926 Other Income (2) 1,843 1,279 297 Total Ancillary Revenue 15,588 8,963 10,223 Total Revenues $ 261,276 $ 209,390 $ 151,312 (1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Consolidated statements of operations.
Adjusted EPS increased by $0.66 to $1.99 for the year ended December 31, 2024, from $1.33 for the year ended December 31, 2023, driven by a significant increase in income from operations driven by strong growth in Core Revenue and Contingent Commissions with slower growth in operating expenses and the repurchase of 1,045 thousand Class A shares as part of our share repurchase program. 57 GAAP to Non-GAAP Reconciliations The following table shows a reconciliation of total revenues to other non-GAAP measures of revenue for the years ended December 31, 2024, 2023, and 2022 (in thousands) : Year ended December 31, 2024 2023 2022 Total Revenues $ 314,505 $ 261,276 $ 209,390 Core Revenue: Renewal Commissions (1) $ 74,938 $ 70,730 $ 57,543 Renewal Royalty Fees (2) 138,942 107,524 77,346 New Business Commissions (1) 24,608 23,411 24,126 New Business Royalty Fees (2) 27,122 23,168 18,244 Agency Fees (1) 8,127 8,174 10,912 Total Core Revenue 273,737 233,007 188,171 Cost Recovery Revenue: Initial Franchise Fees (2) 6,620 11,238 10,853 Interest Income 932 1,443 1,403 Total Cost Recovery Revenue 7,552 12,681 12,256 Ancillary Revenue: Contingent Commissions (1) 31,385 13,746 7,684 Other Income (2) 1,831 1,843 1,279 Total Ancillary Revenue 33,216 15,588 8,963 Total Revenues $ 314,505 $ 261,276 $ 209,390 (1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the Consolidated statements of operations.
This decrease in New Business Commissions and Agency Fees was primarily attributable to a decrease in total sales agent head count to 300 at December 31, 2023, from 320 at December 31, 2022, a 6% decrease.
This increase in New Business Commissions was primarily attributable to an increase in total sales agent head count to 417 at December 31, 2024, from 300 at December 31, 2023, a 39% increase.
This increase is attributable to an increase in income before taxes offset by a decrease in state and local deferred taxes. Liquidity and capital resources Historical liquidity and capital resources We have managed our historical liquidity and capital requirements primarily through the receipt of revenues from our corporate and franchise sales.
This decrease is primarily attributable to the deferred tax impact of changes in state apportionment and related state filing requirements. 61 Liquidity and capital resources Historical liquidity and capital resources We have managed our historical liquidity and capital requirements primarily through the receipt of revenues from our corporate and franchise sales.
Financing activities Net cash used for financing activities was $17.9 million for 2023 as compared to net cash used for financing activities of $23.2 million for 2022.
Financing activities Net cash used for financing activities was $45.2 million for 2024 as compared to net cash used for financing activities of $18.0 million for 2023.
Year Ended December 31 % Change 2023 2022 Corporate Sales Total Written Premium $ 681,025 $ 554,764 23 % Franchise Sales Total Written Premium 2,282,959 1,662,260 37 % Total Written Premium $ 2,963,984 $ 2,217,024 34 % Policies in Force Policies in Force means the total count of current (non-cancelled) policies placed with Goosehead’s portfolio of Carriers as of a reported date.
Year Ended December 31 % Change 2024 2023 Corporate Sales Total Written Premium $ 765,485 $ 681,025 12 % Franchise Sales Total Written Premium 3,046,507 2,282,959 33 % Total Written Premium $ 3,811,992 $ 2,963,984 29 % Policies in Force Policies in Force means the total count of current (non-cancelled) policies placed with Goosehead’s portfolio of Carriers as of a reported date.
We have calculated future interest obligations based on the interest rate for our debt obligations as of December 31, 2023. (4) See "Item 7. Management's discussion and analysis of financial condition and results of operation - Tax receivable agreement." Critical accounting policies and estimates We prepare our consolidated financial statements in accordance with GAAP.
(5) See "Item 7. Management's discussion and analysis of financial condition and results of operation - Tax receivable agreement." Critical accounting policies and estimates We prepare our consolidated financial statements in accordance with GAAP.
We have made significant progress in recent years in Client Retention metrics, and maintaining these high levels of Client Retention is key to future profitability. • Increase in margins as business shifts from new to renewal.
We have navigated macroeconomic challenges to maintain high levels of Client Retention. Client Retention is key to future profitability. • Increase in margins as business shifts from new to renewal.
Our primary liquidity needs comprise cash to (1) provide capital to facilitate the organic growth of our business, (2) pay operating expenses, including cash compensation to our employees, (3) make payments under the tax receivable agreement, (4) pay interest and principal due on borrowings under our Credit Agreement and (5) pay income taxes. 61 Dividend policy Assuming Goosehead Financial, LLC makes distributions to its members in any given year, the determination to pay dividends, if any, to our Class A common stockholders out of the portion, if any, of such distributions remaining after our payment of taxes, tax receivable agreement payments and expenses (any such portion, an “excess distribution”) will be made at the sole discretion of our board of directors.
Dividend policy Assuming Goosehead Financial, LLC makes distributions to its members in any given year, the determination to pay dividends, if any, to our Class A common stockholders out of the portion, if any, of such distributions remaining after our payment of taxes and tax receivable agreement payments (any such portion, an “excess distribution”) will be made at the sole discretion of our board of directors.
New Business Commissions decreased by $0.7 million, or 3%, to $23.4 million for the year ended December 31, 2023 from $24.1 million for the year ended December 31, 2022. Revenue from Agency Fees decreased by $2.7 million, or 25%, to $8.2 million for the year ended December 31, 2023 from $10.9 million for the year ended December 31, 2022.
Revenue from Agency Fees decreased by $0.1 million, or 1%, to $8.1 million for the year ended December 31, 2024 from $8.2 million for the year ended December 31, 2023.
The transaction price for commissions revenue and royalty fees is set as an estimate of the variable consideration to be received for the current policy term.
Goosehead is compensated for the insurance brokerage services that it provides for clients in the form of commission revenue, agency fees, royalty fees, and contingent commissions. 64 The transaction price for commissions revenue and royalty fees is set as an estimate of the variable consideration to be received for the current policy term.
Growth in Renewal Revenue was driven primarily by Client Retention of 86% at December 31, 2023, and premium rate increases over the prior year. As our agent force matures, the policies they wrote in prior years begin to convert from New Business Revenue to more profitable Renewal Revenue.
As our agent force matures, the policies they wrote in prior years begin to convert from New Business Revenue to more profitable Renewal Revenue. Continued declines in client retention caused by increases in premium rates could slow the growth of our Renewal Revenue in the future.
Our primary cash flow activities involve: (1) generating cash flow from corporate sales, which largely includes Renewal Revenue (Corporate) and New Business Revenue (Corporate); (2) generating cash flow from franchise sales, which largely includes Royalty Fees and Initial Franchise Fees; 60 (3) making distributions to the Goosehead Management Holders and Texas Wasatch Holders; and (4) borrowings, interest payments and repayments under our Credit Agreement.
Our primary cash flow activities involve: (1) generating cash flow from Commissions and Fees, which largely includes New Business Commissions, Renewal Commissions and Agency Fees; (2) generating cash flow from Franchise Revenue operations, which largely includes Royalty Fees and Initial Franchise Fees; (3) borrowings, interest payments and repayments under our credit agreement; (4) issuing shares of Class A common stock.
The increase in revenue from Renewal Royalty Fees was primarily attributable to strong premium retention rate and more policies in the renewal term, offset by a slight decline in client retention to 86% at December 31, 2023 from 88% at December 31, 2022.
The increase in revenue from Renewal Royalty Fees was primarily attributable to an increase in the number of policies in the renewal term from December 31, 2023 to December 31, 2024, assisted by client retention of 84%, and premium rate increases.
Initial Franchise Fee revenue increased approximately $0.4 million, or 4%, to $11.2 million for the year ended December 31, 2023 from $10.9 million for the year ended December 31, 2022. The primary driver of the increase in Initial Franchise Fees was the acceleration of Initial Franchise Fee revenue from terminations of existing agencies.
Initial Franchise Fee revenue decreased approximately $4.6 million, or 41%, to $6.6 million for the year ended December 31, 2024 from $11.2 million for the year ended December 31, 2023. The primary driver of the decrease in Initial Franchise Fees was a decrease in terminations of franchises, which reduced the accelerated recognition of initial franchise fee revenue.
(2) The Company refinanced its credit facilities on July 21, 2021 in the form of a $100 million term loan and $50 million revolving credit facility, of which nothing was drawn on the revolving credit facility as of December 31, 2023. (3) Interest payments on our outstanding debt obligations under our Credit Agreement. Our debt obligations have variable interest rates.
(2) The Company further amended its credit facilities on April 24, 2024 increasing term loan borrowings by $25 million and increasing the revolving credit facility by $25 million to $75 million, of which nothing was drawn on the revolving credit facility as of December 31, 2024. (3) Interest payments on our outstanding debt obligations under our Credit Agreement.
Interest Income Interest Income remained stable at $1.4 million for 2023 compared to $1.4 million for 2022, driven by a similar number of franchises on a payment plan in both periods. Expenses Employee compensation and benefits Employee compensation and benefits expenses increased by $19.3 million, or 14%, to $152.6 million for 2023 from $133.3 million for 2022.
Interest Income Interest Income decreased to $0.9 million for 2024 compared to $1.4 million for 2023, driven by fewer franchises on a payment plan in the current period. Expenses Employee compensation and benefits Employee compensation and benefits expenses increased by $20.3 million, or 13%, to $172.9 million for 2024 from $152.6 million for 2023.
Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. Contractual obligations, commitments and contingencies The following table represents our contractual obligations as of December 31, 2023, aggregated by type.
Contractual obligations, commitments and contingencies The following table represents our contractual obligations as of December 31, 2024, aggregated by type.
The Adjusted EBITDA margin increase came from a significant increase in Core Revenue and slower growth in both employee compensation and benefits and general and administrative expenses.
The Adjusted EBITDA margin increase came from a 17% increase in Core Revenue with slower growth of 13% in employee compensation and benefits excluding equity-based compensation and of 14% in general and administrative expenses excluding impairment as well as a $17.6 million increase in high-margin Contingent Commissions.
This increase is primarily attributable to strong premium retention and more policies in the renewal term, offset by a slight decline in client retention to 86% at December 31, 2023 from 88% at December 31, 2022.
This increase is primarily attributable to an increase in the number of policies in the renewal term from December 31, 2023 to December 31, 2024, assisted by client retention of 84%, and premium rate increases.
This increase is attributable to a rising interest rate environment during the year, partially offset by a decrease in total borrowings outstanding. Tax expense Tax expenses increased by $0.2 million, or 8%, to $2.7 million for 2023 from $2.5 million for 2022.
This increase was primarily attributable to the increase in investments in software development during 2024. Interest expense Interest expenses increased by $0.8 million, or 12%, to $7.3 million for 2024 from $6.6 million for 2023. This increase is attributable to an increase in total borrowings outstanding.
Adjusted EBITDA increased by $33.2 million, or 90%, to $69.8 million for the year ended December 31, 2023, from $36.7 million for the year ended December 31, 2022, driven by a significant increase in core revenue and slower growth in both employee compensation and benefits and general and administrative expenses.
Adjusted EBITDA increased by $30.1 million, or 43%, to $99.9 million for the year ended December 31, 2024, from $69.8 million for the year ended December 31, 2023, driven by a 17% increase in Core Revenue with slower growth of 13% in employee compensation and benefits excluding equity-based compensation and of 14% in general and administrative expenses excluding impairment as well as a $17.6 million increase in high-margin Contingent Commissions.
Our retention rate is even stronger on a premium basis. In 2023, we retained 101% of the premiums we distributed in 2022, an increase from premium retention in 2022 of 100% primarily due to premium increases from our Carriers during the year.
Our retention rate is even stronger on a premium basis, driven from increases in premium taken by our Carriers and additional coverages sold by our sales agents. In 2024, we retained 98% of the premiums we distributed in 2023, a decrease from premium retention in 2023 of 101%.
Renewal Revenue Renewal Revenue is commissions received from the Carrier and Royalty Fees after the first term of a policy. For the year ended December 31, 2023, Renewal Revenue grew 32% to $178.3 million, from $134.9 million for the year ended December 31, 2022.
New Business Revenue New Business Revenue is commissions received from the Carrier, Agency Fees received from clients, and Royalty Fees relating to policies in their first term. For the year ended December 31, 2024, New Business Revenue grew 9% to $59.9 million, from $54.8 million for the year ended December 31, 2023.
This was primarily attributable to the hiring of more experienced team members, particularly at the leadership level, and an increase in equity-based compensation of 22% related to additional stock options granted during 2023. General and administrative expenses General and administrative expenses increased by $9.2 million, or 17%, to $62.1 million for 2023 from $52.9 million for 2022.
This was primarily related to investments in corporate producers and technology functions, and increases in equity-based compensation of 17% related to additional stock options granted during 2024. General and administrative expenses General and administrative expenses increased by $5.0 million, or 8%, to $67.1 million for 2024 from $62.1 million for 2023.
We believe that Cost Recovery Revenue is an appropriate measure of operating performance because it summarizes revenues that are viewed by management as cost recovery mechanisms. Cost Recovery Revenue increased by $0.4 million, or 3%, to $12.7 million for the year ended December 31, 2023 from $12.3 million for the year ended December 31, 2022.
Cost Recovery Revenue Cost Recovery Revenue is a supplemental measure of our performance and includes Initial Franchise Fees and Interest Income. We believe that Cost Recovery Revenue is an appropriate measure of operating performance because it summarizes revenues that are viewed by management as cost recovery mechanisms.
We believe that Ancillary Revenue is an appropriate measure of operating performance because it summarizes revenues that are ancillary to our core business. Ancillary Revenue increased by $6.6 million, or 74%, to $15.6 million for the year ended December 31, 2023 from $9.0 million for the year ended December 31, 2022.
Ancillary Revenue Ancillary Revenue is a supplemental measure of our performance and includes Contingent Commissions and Other Income. We believe that Ancillary Revenue is an appropriate measure of operating performance because it summarizes revenues that are ancillary to our core business.
Investing activities Net cash used for business investment activities was $19.2 million for 2023 as compared to net cash used for business investment activities of $12.6 million for 2022.
These increases were partially offset by a $19.9 million increase in commissions and agency fees receivable, which is primarily related to an increase in contingent commissions receivable. Investing activities Net cash used for business investment activities was $12.4 million for 2024 as compared to net cash used for business investment activities of $19.2 million for 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hard market is an insurance market characterized by a period of rising premium rates, which, absent other changes, can positively affect commissions earned by insurance agents. The Company represents over 150 insurance carriers, of which 60 provide national coverage. During 2023, two carriers represented more than 10% of total revenue at 16% and 12%.
Biggest changeA hard market is an insurance market characterized by a period of rising premium rates, which, absent other changes, can positively affect commissions earned by insurance agents. The Company represents over 200 insurance carriers, of which 54 provide national coverage. During 2024, three carriers represented more than 10% of total revenue at 19%, 15%, and 10%.
Insurance premium pricing within the P&C insurance industry has historically been cyclical, based on the underwriting capacity of the insurance industry and economic conditions. External events, such as terrorist attacks, man-made and natural disasters, can also have significant impacts on the insurance market.
Insurance premium pricing within the P&C insurance industry has historically been cyclical, based on the underwriting capacity of the insurance industry and economic conditions. External events, such as terrorist attacks and man-made and natural disasters can also have significant impacts on the insurance market.
As of December 31, 2023, we had $77.5 million of borrowings outstanding under our Credit Agreement, which bears interest on a floating basis tied to SOFR and therefore is subject to changes in the associated interest expense. The effect of an immediate hypothetical 10% change in interest rates would not have a material effect on our consolidated financial statements. 64
As of December 31, 2024, we had $93.1 million of borrowings outstanding under our Credit Agreement, which bears interest on a floating basis tied to SOFR and therefore is subject to changes in the associated interest expense. The effect of an immediate hypothetical 10% change in interest rates would not have a material effect on our consolidated financial statements. 66

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