Goosehead Insurance, Inc 10-Q for FY2022 Q3

Goosehead Insurance, Inc. (GSHD)

10-Q 2022-10-27 For: 2022-09-30

Added on April 04, 2026

About this 10-Q

Goosehead Insurance, Inc filed this 10-Q on October 27, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $57.69M; up 38.4% from $41.68M a year earlier
Net income: $1.98M; down 51.0% from net income of $4.04M a year earlier
Diluted EPS: $0.09; down 52.6% from $0.19 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Delaware			82-3886022
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)
1500 Solana Blvd, Building 4, Suite 4500
Westlake
Texas			76262
(Address of principal executive offices)			(Zip Code)


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock, par value $.01 per share	GSHD	NASDAQ



		Page
Part I
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

Part II
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38

SIGNATURES		38


		Page
Condensed Consolidated Statements of Operations		6
Condensed Consolidated Balance Sheets		7
Condensed Consolidated Statements of Stockholders' Equity		8
Condensed Consolidated Statements of Cash Flows		11
Notes to the Condensed Consolidated Financial Statements		12
Note 1	Organization	12
Note 2	Summary of significant accounting policies	12
Note 3	Revenues	14
Note 4	Franchise fees receivable	16
Note 5	Allowance for uncollectible agency fees	16
Note 6	Property and equipment	17
Note 7	Debt	17
Note 8	Income taxes	18
Note 9	Stockholder's equity	19
Note 10	Non-controlling interest	20
Note 11	Equity-based compensation	21
Note 12	Segment information	22
Note 13	Litigation	22
Note 14	Subsequent events	22


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Commissions and agency fees	$	27,402	$	22,420	$	73,676	$	61,007
Franchise revenues	29,922		18,960		77,299		49,234
Interest income	363		301		1,012		841
Total revenues	57,687		41,681		151,987		111,082
Operating Expenses:
Employee compensation and benefits	36,328		26,078		99,471		69,862
General and administrative expenses	13,456		10,141		39,358		29,549
Bad debts	2,306		732		4,762		1,825
Depreciation and amortization	1,809		1,188		5,043		3,320
Total operating expenses	53,899		38,139		148,634		104,556
Income from operations	3,788		3,542		3,353		6,526
Other Income (Expense):
Other income	—		7		—		146
Interest expense	(1,414)		(756)		(3,411)		(1,903)
Income (loss) before taxes	2,374		2,793		(58)		4,769
Tax expense (benefit)	(666)		(2,575)		(104)		(2,646)
Net income	3,040		5,368		46		7,415
Less: net income (loss) attributable to non-controlling interests	1,061		1,332		(18)		2,288
Net income attributable to Goosehead Insurance, Inc.	$	1,979	$	4,036	$	64	$	5,127
Earnings per share:
Basic	$	0.09	$	0.21	$	—	$	0.27
Diluted	$	0.09	$	0.19	$	—	$	0.25
Weighted average shares of Class A common stock outstanding
Basic	20,892		19,559		20,531		18,903
Diluted	21,569		21,206		21,430		20,570


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	September 30,		December 31,
	2022		2021
Assets
Current Assets:
Cash and cash equivalents	$	46,107	$	28,526
Restricted cash	2,263		1,953

Commissions and agency fees receivable, net	11,271		12,056
Receivable from franchisees, net	2,929		2,986
Prepaid expenses	5,573		4,785

Total current assets	68,143		50,306
Receivable from franchisees, net of current portion	28,126		29,180
Property and equipment, net of accumulated depreciation	35,219		24,933
Right-of-use asset	42,528		32,656
Intangible assets, net of accumulated amortization	4,334		2,798
Deferred income taxes, net	140,244		125,676
Other assets	5,394		4,742
Total assets	$	323,988	$	270,291
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued expenses	$	13,500	$	12,995
Premiums payable	2,263		1,953

Lease liability	6,776		4,893

Contract liabilities	6,224		6,054
Note payable	6,250		4,375
Total current liabilities	35,013		30,270
Lease liability, net of current portion	64,181		47,335

Note payable, net of current portion	113,530		118,361
Contract liabilities, net of current portion	44,535		42,554
Liabilities under tax receivable agreement	112,394		100,959
Total liabilities	369,653		339,479

Class A common stock, $0.01 par value per share - 300,000 shares authorized, 21,202 shares issued and outstanding as of September 30, 2022, 20,198 shares issued and outstanding as of December 31, 2021	210		200
Class B common stock, $0.01 par value per share - 50,000 shares authorized, 16,201 issued and outstanding as of September 30, 2022, 16,909 shares issued and outstanding as of December 31, 2021	163		170
Additional paid in capital	67,238		46,281
Accumulated deficit	(61,282)		(60,671)
Total stockholders' equity (deficit)	6,329		(14,020)
Non-controlling interests	(51,994)		(55,168)
Total equity	(45,665)		(69,188)
Total liabilities and equity	$	323,988	$	270,291


	Issued shares of Class A common stock	Issued shares of Class B common stock	Class A Common stock		Class B Common Stock		Additional paid in capital		Accumulated deficit		Total stockholders' equity		Non-controlling interest		Total equity
Balance, January 1, 2022	20,198	16,909	$	200	$	170	$	46,281	$	(60,671)	$	(14,020)	$	(55,168)	$	(69,188)

Net loss	—	—	—		—		—		(2,257)		(2,257)		(3,126)		(5,383)
Exercise of stock options	19	—	—		—		256		—		256		—		256
Equity-based compensation	—	—	—		—		5,788		—		5,788		—		5,788
Activity under employee stock purchase plan	3	—	—		—		214		—		214		—		214
Redemption of LLC Units	101	(101)	1		(1)		(344)		—		(344)		344		—
Deferred tax adjustments related to Tax Receivable Agreement	—	—	—		—		394		—		394		22		416
Reallocation of Non-controlling interest	—	—	—		—		—		(478)		(478)		478		—
Balance March 31, 2022	20,321	16,808	$	201	$	169	$	52,589	$	(63,406)	$	(10,447)	$	(57,450)	$	(67,897)





Net income	—	—	—		—		—		342		342		2,047		2,389
Exercise of stock options	94	—	1		—		1,007		—		1,008		—		1,008
Equity-based compensation	—	—	—		—		5,173		—		5,173		—		5,173
Activity under employee stock purchase plan	4	—	—		—		177		—		177		—		177
Redemption of LLC Units	115	(115)	1		(1)		(377)		—		(377)		377		—
Deferred tax adjustments related to Tax Receivable Agreement	—	—	—		—		373		—		373		30		403
Reallocation of Non-controlling interest	—	—	—		—		—		(226)		(226)		226		—
Balance June 30, 2022	20,534	16,693	$	203	$	168	$	58,942	$	(63,290)	$	(3,977)	$	(54,770)	$	(58,747)





Net income	—	—	—		—		—		1,487		1,487		1,649		3,136
Exercise of stock options	31	—	—		—		439		—		439		—		439
Equity-based compensation	—	—	—		—		1,851		—		1,851		—		1,851
Activity under employee stock purchase plan	2	—	—		—		214		—		214		—		214
Redemption of LLC Units	728	(728)	7		(7)		(1,280)		—		(1,280)		1,280		—
Deferred tax adjustments related to Tax Receivable Agreement	—	—	—		—		3,063		—		3,063		101		3,164
Reallocation of Non-controlling interest	—	—	—		—		—		(6)		(6)		6		—
Balance June 30, 2021	19,209	17,586	$	191	$	176	$	36,579	$	(33,527)	$	3,419	$	(30,920)	$	(27,501)


Dividends declared	—	—	—	—	—	(31,657)	(31,657)	(28,343)	(60,000)
Net income	—	—	—	—	—	4,036	4,036	1,332	5,368
Exercise of stock options	229	—	2	—	2,309	—	2,311	—	2,311
Equity-based compensation	—	—	—	—	1,851	—	1,851	—	1,851
Activity under employee stock purchase plan	1	—	—	—	194	—	194	—	194
Redemption of LLC Units	347	(347)	3	(3)	(1,144)	—	(1,144)	1,144	—
Deferred tax adjustments related to Tax Receivable Agreement	—	—	—	—	2,031	—	2,031	62	2,093
Reallocation of Non-controlling interest	—	—	—	—	—	99	99	(99)	—
Balance September 30, 2021	19,786	17,239	196	173	41,820	(61,049)	(18,860)	(56,824)	(75,684)


Goosehead Insurance, Inc.
Notes to the Condensed Consolidated Financial Statements (Unaudited)


	September 30, 2022		December 31, 2021		Increase/(decrease)
Cost to obtain franchise contracts(1)	$	3,007	$	1,973	$	1,034
Commissions and agency fees receivable, net(2)	11,271		12,056		(785)
Receivable from franchisees(2)	31,055		29,673		1,382
Contract liabilities(2)(3)	50,759		48,608		2,151



Contract liabilities at December 31, 2021	$	48,608
Revenue recognized during the period	(7,943)
New deferrals(1)	10,094
Contract liabilities at September 30, 2022	$	50,759


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Type of revenue stream:
Commissions and agency fees
Renewal Commissions	$	16,485	$	10,969	$	41,233	$	29,036
New Business Commissions	6,215		6,013		18,312		16,573
Agency Fees	2,740		3,050		8,491		8,579
Contingent Commissions	1,962		2,388		5,640		6,819
Franchise revenues
Renewal Royalty Fees	21,574		13,206		54,446		33,622
New Business Royalty Fees	4,866		4,003		13,979		10,840
Initial Franchise Fees	3,056		1,680		7,943		4,570
Other Franchise Revenues	426		71		931		202
Interest Income	363		301		1,012		841
Total Revenues	$	57,687	$	41,681	$	151,987	$	111,082

Timing of revenue recognition:
Transferred at a point in time	$	25,440	$	20,032	$	68,036	$	54,188
Transferred over time	32,247		21,649		83,951		56,894
Total Revenues	$	57,687	$	41,681	$	151,987	$	111,082


Balance at December 31, 2021	$	303
Charges to bad debts	3,099
Write offs	(2,840)
Balance at September 30, 2022	$	562

Balance at December 31, 2020	$	149
Charges to bad debts	516
Write offs	(484)
Balance at September 30, 2021	$	181


Balance at December 31, 2021	$	489
Charges to bad debts	1,663
Write offs	(1,658)
Balance at September 30, 2022	$	494

Balance at December 31, 2020	$	468
Charges to bad debts	1,309
Write offs	(1,270)
Balance at September 30, 2021	$	507


	September 30, 2022		December 31, 2021
Furniture & fixtures	$	7,784	$	7,283
Computer equipment	4,033		3,369
Network equipment	371		514
Phone system	326		937
Leasehold improvements	36,393		25,115
Total	48,907		37,218
Less accumulated depreciation	(13,688)		(12,285)
Property and equipment, net	$	35,219	$	24,933


	September 30, 2022		December 31, 2021
Franchise fees receivable(1)	$	41,161	$	40,171
Less: Unamortized discount(1)	(11,041)		(9,518)
Less: Allowance for uncollectible franchise fees(1)	(562)		(303)
Net franchise fees receivable(1)	$	29,558	$	30,350


Leverage Ratio			Interest Rate
< 1.50x			LIBOR + 175 bps
> 1.50x			LIBOR + 200 bps
> 2.50x			LIBOR + 225 bps
> 3.50x			LIBOR + 250 bps


	Amount
2022	1,250
2023	6,875
2024	9,375
2025	10,000
2026	68,125
Total	$	95,625


	September 30, 2022
	LLC Units	Ownership %
Number of LLC Units held by GSHD	21,202	56.7%
Number of LLC Units held by non-controlling interest holders	16,201	43.3%
Number of LLC Units outstanding	37,403	100.0%


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021
Core Revenue:
Renewal Commissions(1)	$16,485	29	%	$10,969	26	%	$41,233	27	%	$29,036	26	%
Renewal Royalty Fees(2)	21,574	37	%	13,206	32	%	54,446	36	%	33,622	30	%
New Business Commissions(1)	6,215	11	%	6,013	14	%	18,312	12	%	16,573	15	%
New Business Royalty Fees(2)	4,866	8	%	4,003	10	%	13,979	9	%	10,840	10	%
Agency Fees(1)	2,740	5	%	3,050	7	%	8,491	6	%	8,579	8	%
Total Core Revenue	51,880	90	%	37,241	89	%	136,461	90	%	98,650	89	%
Cost Recovery Revenue:
Initial Franchise Fees(2)	3,056	5	%	1,680	4	%	7,943	5	%	4,570	4	%
Interest Income	363	1	%	301	1	%	1,012	1	%	841	1	%
Total Cost Recovery Revenue	3,419	6	%	1,981	5	%	8,955	6	%	5,411	5	%
Ancillary Revenue:
Contingent Commissions(1)	1,962	3	%	2,388	6	%	5,640	4	%	6,819	6	%
Other Franchise Revenues(2)	426	1	%	71	—	%	931	1	%	202	—	%
Total Ancillary Revenue	2,388	4	%	2,459	6	%	6,571	4	%	7,021	6	%
Total Revenues	$57,687	100	%	$41,681	100	%	$151,987	100	%	$111,082	100	%


	Three Months Ended September 30,				% Change
	2022		2021
Corporate sales Total Written Premium	$	151,212	$	116,605	30	%
Franchise sales Total Written Premium	464,363		318,147		46	%
Total Written Premium	$	615,575	$	434,752	42	%


	Contractual obligations, commitments and contingencies
(in thousands)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating leases(1)	$	85,971	$	1,948	$	32,313	$	11,535	$	40,175
Debt obligations payable(2)	95,625		6,250		18,750		70,625		—
Interest expense(3)	34,149		5,265		3,158		25,726		—
Liabilities under the tax receivable agreement(4)	112,753		359		19,672		16,196		76,526
Total	$	328,498	$	13,822	$	73,893	$	124,082	$	116,701


Exhibit 10.1			Offer Letter to Mark E. Jones, Jr., dated September 11, 2022 (incorporated by reference to exhibit 10.1 to Goosehead Insurance Inc.'s Current Report on Form 8-K filed with the Commission on September 12, 2022)
Exhibit 10.2			Separation and Engagement Agreement, dated September 1 5 , 2022, by and between Goosehead Insurance, Inc. and Mark S.. Colby.
Exhibit 31.1			Certifications of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2			Certifications of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			XBRL Instance Document
101.SCH			XBRL Schema Document
101.CAL			XBRL Calculation Linkbase Document
101.DEF			XBRL Definition Linkbase Document
101.LAB			XBRL Label Linkbase Document
101.PRE			XBRL Presentation Linkbase