Goosehead Revenue Soars 18% YTD, But Rising Debt Hits Net Income

Ticker: GSHD · Form: 10-Q · Filed: 2025-10-23T00:00:00.000Z

Sentiment: mixed

Topics: Insurance Brokerage, Franchise Model, Revenue Growth, Debt Levels, Interest Expense, Financial Performance, 10-Q Analysis

TL;DR

**Goosehead's revenue growth is impressive, but the massive debt increase is a red flag for future earnings; proceed with caution.**

AI Summary

Goosehead Insurance, Inc. (GSHD) reported a robust increase in total revenues for the three and nine months ended September 30, 2025. Total revenues for the three-month period rose to $90.435 million, up from $78.035 million in the prior year, marking a 15.9% increase. For the nine-month period, total revenues reached $260.046 million, a 17.9% increase from $220.583 million in 2024. This growth was primarily driven by franchise revenues, which increased by $8.957 million to $55.819 million for the quarter and by $26.487 million to $157.563 million for the nine months. Despite higher operating expenses, including a significant increase in employee compensation and benefits to $48.725 million for the quarter, net income attributable to Goosehead Insurance, Inc. saw a modest rise to $7.908 million from $7.559 million for the three months. However, for the nine-month period, net income attributable to GSHD slightly decreased to $15.400 million from $15.571 million, primarily due to a substantial increase in interest expense to $18.100 million from $5.529 million. The company also saw a significant increase in its note payable, rising to $290.004 million from $82.251 million at December 31, 2024, indicating increased leverage.

Why It Matters

Goosehead's strong revenue growth, particularly in its franchise segment, signals continued market penetration and a successful business model, which is positive for investors. However, the substantial increase in interest expense and overall debt levels could concern investors, indicating higher financial risk and potentially impacting future profitability and dividend capacity. For employees, sustained revenue growth suggests job stability and potential expansion. Customers benefit from an expanding network of franchise agents, potentially leading to more localized and personalized service. In the competitive insurance brokerage market, Goosehead's growth demonstrates its ability to capture market share, putting pressure on rivals to innovate or expand their own distribution channels.

Risk Assessment

Risk Level: high — The company's note payable surged from $82.251 million at December 31, 2024, to $290.004 million at September 30, 2025, representing a 252% increase. This significant rise in debt led to a substantial increase in interest expense, from $5.529 million for the nine months ended September 30, 2024, to $18.100 million for the same period in 2025, directly impacting net income attributable to Goosehead Insurance, Inc., which slightly declined despite strong revenue growth.

Analyst Insight

Investors should closely monitor Goosehead's debt management strategies and future interest expense trends. While revenue growth is strong, the increased leverage introduces significant financial risk. Consider if the growth justifies the increased debt burden and assess the company's ability to service this debt, especially in a rising interest rate environment.

Financial Highlights

revenue
$260,046,000
operating Margin
16.7%
total Assets
$470,087,000
total Debt
$290,004,000
net Income
$15,400,000
eps
$0.56
cash Position
$51,587,000
revenue Growth
+17.9%

Revenue Breakdown

SegmentRevenueGrowth
Commissions and agency fees$101,953,000+14.8%
Franchise revenues$157,563,000+20.2%
Interest income$530,000-26.8%

Key Numbers

Key Players & Entities

FAQ

How did Goosehead Insurance's revenue perform in Q3 2025?

Goosehead Insurance's total revenues for the three months ended September 30, 2025, increased by 15.9% to $90.435 million, up from $78.035 million in the same period last year. This growth was largely driven by franchise revenues, which rose to $55.819 million.

What was Goosehead Insurance's net income for the nine months ended September 30, 2025?

For the nine months ended September 30, 2025, Goosehead Insurance reported net income attributable to Goosehead Insurance, Inc. of $15.400 million. This was a slight decrease from $15.571 million in the prior year, primarily due to a significant increase in interest expense.

What is the primary reason for the decline in Goosehead Insurance's nine-month net income despite revenue growth?

The primary reason for the slight decline in Goosehead Insurance's nine-month net income, despite strong revenue growth, was a substantial increase in interest expense. Interest expense surged to $18.100 million for the nine months ended September 30, 2025, compared to $5.529 million in the same period of 2024.

How has Goosehead Insurance's debt changed as of September 30, 2025?

Goosehead Insurance's note payable significantly increased to $290.004 million as of September 30, 2025, from $82.251 million at December 31, 2024. This represents a 252% increase in the company's debt obligations.

How many franchise locations did Goosehead Insurance have operating as of September 30, 2025?

As of September 30, 2025, Goosehead Insurance had 1,068 operating franchise locations. This is a slight decrease from 1,116 operating franchise locations reported as of September 30, 2024, despite onboarding 34 new franchise locations during the third quarter of 2025.

What are the key revenue streams for Goosehead Insurance?

Goosehead Insurance's key revenue streams include commissions and agency fees, franchise revenues, and interest income. Franchise revenues, consisting of Initial Franchise Fees and Royalty Fees, are a significant and growing component, contributing $55.819 million in Q3 2025.

What impact did employee compensation have on Goosehead Insurance's operating expenses?

Employee compensation and benefits significantly contributed to Goosehead Insurance's operating expenses, increasing to $48.725 million for the three months ended September 30, 2025, from $43.217 million in the prior year. For the nine-month period, these expenses rose to $147.447 million from $127.898 million.

What is Goosehead Insurance's risk level based on this 10-Q filing?

Based on this 10-Q filing, Goosehead Insurance's risk level is high. This assessment is primarily due to the substantial increase in its note payable from $82.251 million to $290.004 million, leading to a significant rise in interest expense from $5.529 million to $18.100 million for the nine-month period, which negatively impacted net income.

What should investors consider regarding Goosehead Insurance's increased debt?

Investors should consider the implications of Goosehead Insurance's increased debt on its financial stability and future profitability. The significant rise in interest expense indicates higher leverage, which could strain cash flow and reduce earnings, especially if interest rates continue to climb. It's crucial to assess the company's ability to service this debt and its long-term strategy for debt reduction.

Did Goosehead Insurance repurchase any Class A common stock in Q3 2025?

Yes, Goosehead Insurance repurchased 685 shares of Class A common stock during the three months ended September 30, 2025, resulting in a reduction of $38.362 million in total stockholders' equity. For the nine months ended September 30, 2025, total repurchases amounted to $58.245 million.

Risk Factors

Industry Context

The insurance distribution industry is characterized by a shift towards technology-enabled platforms and a growing reliance on agency networks. Companies are competing on service, product breadth, and efficiency. The trend towards independent agents and franchised models continues as a way to scale distribution rapidly.

Regulatory Implications

Goosehead operates in a highly regulated sector. Changes in insurance laws, consumer protection regulations, and data privacy requirements could necessitate costly compliance measures and impact business practices. Maintaining proper licensing across all operating states is a continuous challenge.

What Investors Should Do

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Key Dates

Glossary

Franchise revenues
Revenue generated from fees paid by franchisees for the right to operate under the Goosehead brand, use its systems, and receive support. (A primary growth driver for Goosehead, accounting for a significant portion of total revenues.)
Noncontrolling interests
The portion of equity interest in a subsidiary that is not attributable to the parent company. It represents the ownership stake of outside shareholders in consolidated subsidiaries. (Impacts the net income attributable to Goosehead Insurance, Inc. by reducing the reported net income.)
Note payable
A written promise to pay a specific amount of money on demand or at a specified future date, often with interest. In this context, it represents a significant form of debt financing. (The substantial increase in note payable indicates higher financial leverage and potential increased financial risk for the company.)
Operating Expenses
Costs incurred by a company in its normal course of business operations, excluding interest and taxes. Includes items like employee compensation, general and administrative costs, and depreciation. (An increase in operating expenses, particularly employee compensation, is impacting profitability despite revenue growth.)
Income from operations
A company's profit before interest and taxes, calculated by subtracting total operating expenses from total revenues. (Shows the profitability of the core business operations, which has shown strong growth.)
Interest expense
The cost incurred by a company for borrowed funds. It is the amount paid on loans, bonds, and other debt instruments. (A significant increase in interest expense is negatively impacting net income for the nine-month period.)
Weighted average shares outstanding
The number of shares of stock outstanding over a period, adjusted for the amount of time each share was outstanding. Used to calculate earnings per share. (Used to calculate basic and diluted EPS, which have slightly decreased year-over-year.)
Right-of-use asset
An asset representing a lessee's right to use an underlying asset for the lease term under a lease agreement, recognized under ASC 842. (Represents the company's long-term lease obligations, impacting the balance sheet.)

Year-Over-Year Comparison

Goosehead Insurance, Inc. reported strong revenue growth of 17.9% for the nine months ended September 30, 2025, driven by franchise revenues. However, this growth was accompanied by a significant increase in interest expense, leading to a slight decrease in net income attributable to GSHD. The company's balance sheet shows a substantial rise in its note payable, indicating increased financial leverage compared to the prior year. Operating expenses also increased, particularly employee compensation and benefits.

Filing Stats: 4,870 words · 19 min read · ~16 pages · Grade level 17.1 · Accepted 2025-10-22 21:13:45

Filing Documents

Condensed Consolidated Financial Statements (Unaudited) 5

Item 1. Condensed Consolidated Financial Statements (Unaudited) 5

Management's Discussion and Analysis of Financial Condition and Results of Operations 34

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 34

Quantitative and Qualitative Disclosures About Market Risk 50

Item 3. Quantitative and Qualitative Disclosures About Market Risk 50

Controls and Procedures 50

Item 4. Controls and Procedures 50 Part II

Legal Proceedings 51

Item 1. Legal Proceedings 51

Risk Factors 51

Item 1A. Risk Factors 51

Unregistered Sales of Equity Securities and Use of Proceeds 51

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 51

Defaults Upon Senior Securities 51

Item 3. Defaults Upon Senior Securities 51

Mine Safety Disclosures 51

Item 4. Mine Safety Disclosures 51

Other Information 51

Item 5. Other Information 51

Exhibits 52

Item 6. Exhibits 52

SIGNATURES

SIGNATURES 52 2 Commonly used defined terms As used in this Quarterly Report on Form 10-Q ("Form 10-Q"), unless the context indicates or otherwise requires, the following terms have the following meanings: Ancillary Revenue: Revenue that is supplemental to our Core Revenue and Cost Recovery Revenue, Ancillary Revenue is unpredictable and often outside of the Company's control. Included in Ancillary Revenue are Contingent Commissions and other income. Agency Fees: Fees separate from commissions charged directly to clients for efforts performed in the issuance of new insurance policies. Annual Report on Form 10-K: The Company's annual report on Form 10-K for the fiscal year ended December 31, 2024. Carrier: An insurance company. Carrier Appointment: A contractual relationship with a Carrier. Client Retention: 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. Contingent Commission: Revenue in the form of contractual payments from Carriers contingent upon several factors, including growth and profitability of the business placed with the Carrier. Core Revenue: The most predictable revenue stream for the Company, these revenues consist of New Business Revenue and Renewal Revenue. New Business Revenue is lower-margin, but fairly predictable. Renewal Revenue is higher-margin and very predictable. Corporate Agent Productivity: The New Business Revenue collected related to corporate sales, divided by the average number of full-time corporate sales agents for the same period. This calculation excludes interns, part-time sales agents and partial full-time equivalent sales managers. Cost Recovery Revenue: Revenue received by the Company associated with cost recovery efforts associated with selling and financing franchises. Included in Cost Recovery Revenue are Initial Franchise Fees and Interest Income. Fra

Condensed Consolidated Financial Statements (Unaudited)

Item 1. Condensed Consolidated Financial Statements (Unaudited) 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 13 Note 1 Organization 13 Note 2 Summary of significant accounting policies 13 Note 3 Revenues 16 Note 4 Franchise fees receivable 19 Note 5 Allowance for uncollectible agency fees 19 Note 6 Property and equipment 20 Note 7 Intangible assets 20 Note 8 Debt 20 Note 9 Income taxes 22 Note 10 Stockholders' equity 23 Note 11 Noncontrolling interest 31 Note 12 Equity-based compensation 32 Note 13 Dividends 32 Note 14 Segment information 32 Note 15 Litigation 33 Note 16 Related Party Transactions 33 5 Goosehead Insurance, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In thousands, except per share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenues: Commissions and agency fees $ 34,454 $ 30,942 $ 101,953 $ 88,782 Franchise revenues 55,819 46,862 157,563 131,076 Interest income 162 231 530 725 Total revenues 90,435 78,035 260,046 220,583 Operating Expenses: Employee compensation and benefits 48,725 43,217 147,447 127,898 General and administrative expenses 17,109 15,201 59,316 49,236 Bad debts 501 565 1,457 2,345 Depreciation and amortization 2,823 2,614 8,275 7,814 Total operating expenses 69,158 61,597 216,495 187,293 Income from operations 21,277 16,438 43,551 33,290 Other Income: Interest expense ( 5,974 ) ( 2,060 ) ( 18,100 ) ( 5,529 ) Other income (expense) ( 209 ) 544 774 ( 5,742 ) Income before taxes 15,094 14,922 26,225 22,019 Tax expense (benefit) 2,404 2,315 2,606 ( 3,272 ) Net income 12,690 12,607 23,619 25,291 Less: net income attributable to noncontrolling interests 4,782 5,048 8,219 9,720 Net inco

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