Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 26, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-38466 | |
Entity Registrant Name | GOOSEHEAD INSURANCE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-3886022 | |
Entity Address, Address Line One | 1500 Solana Blvd, Building 4, Suite 4500 | |
Entity Address, City or Town | Westlake | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 76262 | |
City Area Code | 469 | |
Local Phone Number | 480-3669 | |
Title of 12(b) Security | Class A Common Stock, par value $.01 per share | |
Trading Symbol | GSHD | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001726978 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Class A Common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 21,147,289 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 16,201,948 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues: | ||||
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 | 0 | 7 | 0 | 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 (in dollars per share) | $ 0.09 | $ 0.21 | $ 0 | $ 0.27 |
Diluted (in dollars per share) | $ 0.09 | $ 0.19 | $ 0 | $ 0.25 |
Weighted average shares of Class A common stock outstanding | ||||
Basic (in shares) | 20,892 | 19,559 | 20,531 | 18,903 |
Diluted (in shares) | 21,569 | 21,206 | 21,430 | 20,570 |
Commissions and agency fees | ||||
Revenues: | ||||
Revenues | $ 27,402 | $ 22,420 | $ 73,676 | $ 61,007 |
Franchise revenues | ||||
Revenues: | ||||
Revenues | 29,922 | 18,960 | 77,299 | 49,234 |
Interest income | ||||
Revenues: | ||||
Revenues | $ 363 | $ 301 | $ 1,012 | $ 841 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
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 |
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 |
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 |
Class A Common stock | ||
Current Liabilities: | ||
Common stock | 210 | 200 |
Class B Common Stock | ||
Current Liabilities: | ||
Common stock | $ 163 | $ 170 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) - Parenthetical - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Class A Common stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock shares issued (in shares) | 21,202,000 | 20,198,000 |
Common stock shares outstanding (in shares) | 21,202,000 | 20,198,000 |
Class B Common Stock | ||
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock shares issued (in shares) | 16,201,000 | 16,909,000 |
Common stock shares outstanding (in shares) | 16,201,000 | 16,909,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Class A Common stock | Class B Common Stock | Total stockholders' equity | Common stock Class A Common stock | Common stock Class B Common Stock | Additional paid in capital | Accumulated deficit | Non-controlling interest |
Beginning balance (in shares) at Dec. 31, 2020 | 18,304,000 | 18,447,000 | |||||||
Beginning balance at Dec. 31, 2020 | $ (38,404) | $ (4,876) | $ 183 | $ 184 | $ 29,371 | $ (34,614) | $ (33,528) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Distributions | 0 | ||||||||
Net (loss) income | (1,089) | (396) | (396) | (693) | |||||
Exercise of stock options (in shares) | 9,000 | ||||||||
Exercise of stock options | 226 | 226 | 226 | ||||||
Equity-based compensation | 1,941 | 1,941 | 1,941 | ||||||
Activity under employee stock purchase plan (in shares) | 2,000 | ||||||||
Activity under employee stock purchase plan | 205 | 205 | 205 | ||||||
Redemption of LLC Units (in shares) | 133,000 | 133,000 | |||||||
Redemption of LLC Units | 0 | (249) | $ 1 | $ (1) | (249) | 249 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 816 | 798 | 798 | 18 | |||||
Reallocation of Non-controlling interest | 0 | 2 | 2 | (2) | |||||
Ending balance (in shares) at Mar. 31, 2021 | 18,448,000 | 18,314,000 | |||||||
Ending balance at Mar. 31, 2021 | (36,305) | (2,349) | $ 184 | $ 183 | 32,292 | (35,008) | (33,956) | ||
Beginning balance (in shares) at Dec. 31, 2020 | 18,304,000 | 18,447,000 | |||||||
Beginning balance at Dec. 31, 2020 | (38,404) | (4,876) | $ 183 | $ 184 | 29,371 | (34,614) | (33,528) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net (loss) income | 7,415 | ||||||||
Activity under employee stock purchase plan | 613 | ||||||||
Redemption of LLC Units | (2,673) | ||||||||
Ending balance (in shares) at Sep. 30, 2021 | 19,786,000 | 17,239,000 | |||||||
Ending balance at Sep. 30, 2021 | (75,684) | (18,860) | $ 196 | $ 173 | 41,820 | (61,049) | (56,824) | ||
Beginning balance (in shares) at Mar. 31, 2021 | 18,448,000 | 18,314,000 | |||||||
Beginning balance at Mar. 31, 2021 | (36,305) | (2,349) | $ 184 | $ 183 | 32,292 | (35,008) | (33,956) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net (loss) income | 3,136 | 1,487 | 1,487 | 1,649 | |||||
Exercise of stock options (in shares) | 31,000 | ||||||||
Exercise of stock options | 439 | 439 | 439 | ||||||
Equity-based compensation | 1,851 | 1,851 | 1,851 | ||||||
Activity under employee stock purchase plan (in shares) | 2,000 | ||||||||
Activity under employee stock purchase plan | 214 | 214 | 214 | ||||||
Redemption of LLC Units (in shares) | 728,000 | 728,000 | |||||||
Redemption of LLC Units | 0 | (1,280) | $ 7 | $ (7) | (1,280) | 1,280 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 3,164 | 3,063 | 3,063 | 101 | |||||
Reallocation of Non-controlling interest | 0 | (6) | (6) | 6 | |||||
Ending balance (in shares) at Jun. 30, 2021 | 19,209,000 | 17,586,000 | |||||||
Ending balance at Jun. 30, 2021 | (27,501) | 3,419 | $ 191 | $ 176 | 36,579 | (33,527) | (30,920) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Dividends declared | (60,000) | (31,657) | (31,657) | (28,343) | |||||
Net (loss) income | 5,368 | 4,036 | 4,036 | 1,332 | |||||
Exercise of stock options (in shares) | 229,000 | ||||||||
Exercise of stock options | 2,311 | 2,311 | $ 2 | 2,309 | |||||
Equity-based compensation | 1,851 | 1,851 | 1,851 | ||||||
Activity under employee stock purchase plan (in shares) | 1,000 | ||||||||
Activity under employee stock purchase plan | 194 | 194 | 194 | ||||||
Redemption of LLC Units (in shares) | 347,000 | 347,000 | |||||||
Redemption of LLC Units | 0 | (1,144) | $ 3 | $ (3) | (1,144) | 1,144 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 2,093 | 2,031 | 2,031 | 62 | |||||
Reallocation of Non-controlling interest | 0 | 99 | 99 | (99) | |||||
Ending balance (in shares) at Sep. 30, 2021 | 19,786,000 | 17,239,000 | |||||||
Ending balance at Sep. 30, 2021 | (75,684) | (18,860) | $ 196 | $ 173 | 41,820 | (61,049) | (56,824) | ||
Beginning balance (in shares) at Dec. 31, 2021 | 20,198,000 | 16,909,000 | 20,198,000 | 16,909,000 | |||||
Beginning balance at Dec. 31, 2021 | (69,188) | (14,020) | $ 200 | $ 170 | 46,281 | (60,671) | (55,168) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net (loss) income | (5,383) | (2,257) | (2,257) | (3,126) | |||||
Exercise of stock options (in shares) | 19,000 | ||||||||
Exercise of stock options | 256 | 256 | 256 | ||||||
Equity-based compensation | 5,788 | 5,788 | 5,788 | ||||||
Activity under employee stock purchase plan (in shares) | 3,000 | ||||||||
Activity under employee stock purchase plan | 214 | 214 | 214 | ||||||
Redemption of LLC Units (in shares) | 101,000 | 101,000 | |||||||
Redemption of LLC Units | 0 | (344) | $ 1 | $ (1) | (344) | 344 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 416 | 394 | 394 | 22 | |||||
Reallocation of Non-controlling interest | 0 | (478) | (478) | 478 | |||||
Ending balance (in shares) at Mar. 31, 2022 | 20,321,000 | 16,808,000 | |||||||
Ending balance at Mar. 31, 2022 | (67,897) | (10,447) | $ 201 | $ 169 | 52,589 | (63,406) | (57,450) | ||
Beginning balance (in shares) at Dec. 31, 2021 | 20,198,000 | 16,909,000 | 20,198,000 | 16,909,000 | |||||
Beginning balance at Dec. 31, 2021 | (69,188) | (14,020) | $ 200 | $ 170 | 46,281 | (60,671) | (55,168) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net (loss) income | 46 | ||||||||
Activity under employee stock purchase plan | 556 | ||||||||
Redemption of LLC Units (in shares) | 707,000 | 707,000 | |||||||
Redemption of LLC Units | (2,300) | ||||||||
Ending balance (in shares) at Sep. 30, 2022 | 21,202,000 | 16,201,000 | 21,202,000 | 16,201,000 | |||||
Ending balance at Sep. 30, 2022 | (45,665) | 6,329 | $ 210 | $ 163 | 67,238 | (61,282) | (51,994) | ||
Beginning balance (in shares) at Mar. 31, 2022 | 20,321,000 | 16,808,000 | |||||||
Beginning balance at Mar. 31, 2022 | (67,897) | (10,447) | $ 201 | $ 169 | 52,589 | (63,406) | (57,450) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net (loss) income | 2,389 | 342 | 342 | 2,047 | |||||
Exercise of stock options (in shares) | 94,000 | ||||||||
Exercise of stock options | 1,008 | 1,008 | $ 1 | 1,007 | |||||
Equity-based compensation | 5,173 | 5,173 | 5,173 | ||||||
Activity under employee stock purchase plan (in shares) | 4,000 | ||||||||
Activity under employee stock purchase plan | 177 | 177 | 177 | ||||||
Redemption of LLC Units (in shares) | 115,000 | 115,000 | |||||||
Redemption of LLC Units | 0 | (377) | $ 1 | $ (1) | (377) | 377 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 403 | 373 | 373 | 30 | |||||
Reallocation of Non-controlling interest | 0 | (226) | (226) | 226 | |||||
Ending balance (in shares) at Jun. 30, 2022 | 20,534,000 | 16,693,000 | |||||||
Ending balance at Jun. 30, 2022 | (58,747) | (3,977) | $ 203 | $ 168 | 58,942 | (63,290) | (54,770) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net (loss) income | 3,040 | 1,979 | 1,979 | 1,061 | |||||
Exercise of stock options (in shares) | 171,000 | ||||||||
Exercise of stock options | 3,006 | 3,006 | $ 2 | 3,004 | |||||
Equity-based compensation | 5,395 | 5,395 | 5,395 | ||||||
Activity under employee stock purchase plan (in shares) | 5,000 | ||||||||
Activity under employee stock purchase plan | 165 | 165 | 165 | ||||||
Redemption of LLC Units (in shares) | 492,000 | 492,000 | 492,000 | 492,000 | |||||
Redemption of LLC Units | 0 | (1,579) | $ 5 | $ (5) | (1,579) | 1,579 | |||
Deferred tax adjustments related to Tax Receivable Agreement | 1,476 | 1,311 | 1,311 | 165 | |||||
Reallocation of Non-controlling interest | 0 | 29 | 29 | (29) | |||||
Ending balance (in shares) at Sep. 30, 2022 | 21,202,000 | 16,201,000 | 21,202,000 | 16,201,000 | |||||
Ending balance at Sep. 30, 2022 | $ (45,665) | $ 6,329 | $ 210 | $ 163 | $ 67,238 | $ (61,282) | $ (51,994) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 46 | $ 7,415 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 5,212 | 3,508 |
Bad debt expense | 4,762 | 1,825 |
Equity-based compensation | 16,356 | 5,644 |
Impacts of Tax Receivable Agreement | 11,794 | 31,884 |
Deferred income taxes | (12,274) | (34,942) |
Noncash lease activity | 8,857 | 2,594 |
Changes in operating assets and liabilities: | ||
Receivable from franchisees | (2,021) | (7,840) |
Commissions and agency fees receivable | (878) | 8,947 |
Prepaid expenses | (788) | (2,782) |
Other assets | (646) | (1,257) |
Accounts payable and accrued expenses | 136 | 2,092 |
Contract liabilities | 2,151 | 10,408 |
Premiums payable | 310 | (144) |
Payments pursuant to the tax receivable agreement | 0 | (549) |
Net cash provided by operating activities | 33,017 | 26,803 |
Cash flows from investing activities: | ||
Proceeds from notes receivable | 32 | 24 |
Purchase of software | (2,094) | (1,989) |
Purchase of property and equipment | (14,771) | (8,181) |
Net cash used for investing activities | (16,833) | (10,146) |
Cash flows from financing activities: | ||
Debt issuance costs | 0 | (666) |
Repayment of note payable | (3,125) | (3,744) |
Proceeds from notes payable | 0 | 44,619 |
Proceeds from the issuance of Class A common stock | 4,832 | 3,589 |
Member distributions and dividends | 0 | (60,000) |
Net cash provided by (used for) financing activities | 1,707 | (16,202) |
Net increase in cash and restricted cash | 17,891 | 455 |
Cash and cash equivalents, and restricted cash, beginning of period | 30,479 | 26,236 |
Cash and cash equivalents, and restricted cash, end of period | 48,370 | 26,691 |
Supplemental disclosures of cash flow data: | ||
Cash paid during the period for interest | 3,242 | 1,715 |
Cash paid for income taxes | $ 444 | $ 272 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Goosehead Insurance, Inc. (“GSHD”) is the sole managing member of Goosehead Financial, LLC (“GF”) and has the sole voting power and control of management of GF. Accordingly, GSHD consolidates the financial results of GF and reports non-controlling interest in GSHD’s condensed consolidated financial statements. GF was organized on January 1, 2016 as a Delaware Limited Liability Company and is headquartered in Westlake, TX. GSHD (collectively with its consolidated subsidiaries, the “Company”) provides personal and commercial property and casualty insurance brokerage services for its clients through a network of corporate-owned agencies and franchise units across the nation. The Company had 12 corporate-owned locations in operation at September 30, 2022 and 2021. Franchisees are provided access to insurance Carrier Appointments, product training, technology infrastructure, client service centers and back office services. During the three months ended September 30, 2022 and 2021, the Company onboarded 144 and 92 franchise locations, respectively, and had 1,403 and 1,139 operating franchise locations as of September 30, 2022 and 2021, respectively. No franchises were purchased by the Company during the three and nine months ended September 30, 2022 or 2021. All intercompany accounts and transactions have been eliminated in consolidation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the annual disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial positions at September 30, 2022 and December 31, 2021, the condensed consolidated results of operations, stockholders' equity and statements of cash flows for the three and nine months ended September 30, 2022 and 2021. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Annual Report on Form 10-K. In accordance with Accounting Standards Codification 280 "Segment Reporting", and in the first quarter of 2022, the Company began reporting one operating segment due to changes in how the Company's chief operating decision maker assesses the Company's performance and allocates resources. See Note 12 "Segment Reporting". The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that can be expected for the entire year. The Company experiences seasonal fluctuations of its revenue due to the timing of contingent commission revenue recognition and trends in housing market activity. Impact of the Coronavirus (“COVID-19”) Pandemic To date, the pandemic has not increased our costs of or access to capital under our term note and revolving credit facility, and we do not believe it is reasonably likely to do so in the future. In addition, we do not believe that the pandemic will affect our ongoing ability to meet the covenants in our debt instruments, including under our term note and revolving credit facility. To date, the pandemic has not impacted the collectability of receivables or adversely affected our ability to generate new business, add new franchises, or retain existing franchises or policies. While contingent commissions initially benefited from lower loss ratios in the early part of the pandemic, we now anticipate lower contingent commissions as customers return to pre-pandemic driving patterns and loss ratios increase. Due to the nature of our business, the effect of the COVID-19 pandemic may not be fully reflected in our results of operations until future periods. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates as more information becomes known. Income Taxes The Company accounts for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. Restricted Cash The Company holds premiums received from the insured, but not yet remitted to the insurance Carrier in a fiduciary capacity. Premiums received but not yet remitted included in restricted cash were $2.3 million and $1.2 million as of September 30, 2022 and 2021, respectively. The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 (in thousands) : September 30, 2022 2021 Cash and cash equivalents $ 46,107 $ 25,512 Restricted cash 2,263 1,179 Cash and cash equivalents, and restricted cash $ 48,370 $ 26,691 Recently adopted accounting pronouncements Simplifying the Accounting for Income Taxes (ASU 2019-12) : In 2019, the Financial Accounting Standards Board issued ASU 2019-12 to simplify the accounting for income taxes. The guidance primarily addresses how to (1) recognize a deferred tax liability after we transition to or from the equity method of accounting, (2) evaluate if a step-up in the tax basis of goodwill is related to a business combination or is a separate transaction, (3) recognize all of the effects of a change in tax law in the period of enactment, including adjusting the estimated annual tax rate, and (4) include the amount of tax based on income in the income tax provision and any incremental amount as a tax not based on income for hybrid tax regimes. We adopted the guidance in the first quarter of 2021. The adoption did not have a material impact on our condensed consolidated financial statements or related disclosures. Reference Rate Reform (ASU 2020-04) : In March 2020, the Financial Accounting Standards Board issued ASU 2020-04. Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP if certain criteria are met to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued. ASU 2020-04 is effective from March 12, 2020 through December 31, 2022. A substantial portion of our indebtedness bears interest at variable interest rates, primarily based on USD-LIBOR. The adoption of ASU 2020-04 did not have a material impact on our condensed consolidated financial statements. The standard will ease, if warranted, the administrative requirements for accounting for the future effects of the rate reform. Our debt agreement contains a provision to move to the Secured Overnight Financing Rate ("SOFR") if or when LIBOR is phased out. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Commissions and fees The Company earns new and renewal commissions paid by insurance Carriers and fees paid by its clients for the binding of insurance coverage. The transactions price is set as the estimated commissions to be received over the term of the policy based on an estimate of premiums placed, policy changes and cancellations, net of a constraint. These commissions and fees are earned at a point in time upon the effective date of bound insurance coverage, as no performance obligation exists after coverage is bound. For Agency Fees, the Company enters into a contract with the insured, in which the Company's performance obligation is to place an insurance policy. The transaction price of the agency fee is set at the time the sale is agreed upon, and is included in the contract. Agency Fee revenue is recognized at a point in time, which is the effective date of the policy. Contingent commission revenue is generated from contracts between the Company and insurance carriers, for which the Company is compensated for certain growth, profitability, or other performance-based metrics. The performance obligations for contingent commissions will vary by contract, but generally include the Company increasing profitable written premium with the insurance carrier. The transaction price for contingent commissions is estimated based on all available information and is recognized over time as the Company completes its performance obligations, as the underlying policies are placed, net of a constraint. Franchise revenues Franchise revenues include initial franchise fees and ongoing new and renewal royalty fees from franchisees. Revenue from initial franchise fees is generated from a contract between the Company and a franchisee. The Company's performance obligation is to provide initial training, onboarding, ongoing support and use of the Company's business operations over the period of the franchise agreement. The transaction price is set by the franchise agreement and revenue is recognized over time as the Company completes its performance obligations. Revenue from new and renewal royalty fees is recorded by applying the sales- and usage-based royalties exception. Under the sales- and usage-based exception, the Company estimates the anticipated amount of the royalties to be received over the term of the policy based on an estimate of premiums placed by the franchisee, policy changes, and cancellations, net of a constraint. Revenue from royalty fees is recognized over time as the placement of the underlying policies occur. Contract costs The Company has evaluated ASC Topic 340 - Other Assets and Deferred Cost (“ASC 340”) which requires companies to defer certain incremental cost to obtain customer contracts, and certain costs to fulfill customer contracts. Incremental cost to obtain - The adoption of ASC 340 resulted in the Company deferring certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans for the franchise sales team, in which the Company pays an incremental amount of compensation on new Franchise Agreements. These incremental costs are deferred and amortized over a 10-year period, which is consistent with the term of the contract. Costs to fulfill - The Company has evaluated the need to capitalize costs to fulfill customer contracts and has determined that there are no costs that meet the definition for capitalization under ASC 340. Disaggregation of Revenue The following table disaggregates revenue by source (in thousands) : 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 Contract Balances The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands) : 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 (1) Cost to obtain franchise contracts is included in Other assets on the condensed consolidated balance sheets. (2) Includes both the current and long term portion of this balance. (3) Initial Franchise Fees to be recognized over the life of the contract. The Company records Franchise Fees as contract liabilities on the Condensed Consolidated Balance Sheets when the agreement is executed. Contract liabilities are reduced as fees are recognized in revenue over the expected life of the franchise license. As the term of the franchise license is typically ten years, substantially all of the franchise fee revenue recognized in the period ended September 30, 2022 was included in the contract liabilities balance as of December 31, 2021. The weighted average remaining amortization period for contract liabilities related to open franchises is 7.9 years. Significant changes in contract liabilities are as follows (in thousands) : 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 (1) Initial Franchise Fees where the consideration is received from the franchisee for services which are to be transferred to the Franchisee over the expected life of the Franchise Agreement |
Franchise Fees Receivable
Franchise Fees Receivable | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Franchise Fees Receivable | Franchise Fees Receivable The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following (in thousands) : September 30, 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 (1) Includes both the current and long term portion of this balance Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 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 |
Allowance for Uncollectible Age
Allowance for Uncollectible Agency Fees | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Allowance for Uncollectible Agency Fees | Allowance for Uncollectible Agency Fees Activity in the allowance for uncollectible Agency Fees was as follows (in thousands) : Balance at December 31, 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 |
Property and equipment
Property and equipment | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment Property and equipment consisted of the following (in thousands) : 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 Depreciation expense was $4.5 million and $3.0 million for nine months ended September 30, 2022 and 2021, respectively. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt On July 21, 2021, the Company refinanced its $25.0 million revolving credit facility and $80.0 million term note payable to a $50.0 million revolving credit facility and $100.0 million term note payable to finance general corporate purposes and the special dividend. The Company also has the right, subject to approval by the administrative agent and each issuing bank, to increase the commitments under the credit facilities by an additional $25.0 million. The $50.0 million revolving credit facility accrues interest on amounts drawn at an initial interest rate of LIBOR plus 2.50%, then at an interest rate determined by the Company's leverage ratio for the preceding period. At September 30, 2022 the Company was accruing interest at LIBOR plus 225 basis points. At September 30, 2022, the Company had $25.0 million drawn against the revolving credit facility and had a letter of credit of $0.2 million applied against the maximum borrowing availability, payable on July 21, 2026. Thus, amounts available to draw totaled $24.8 million. The revolving credit facility is collateralized by substantially all the Company’s assets, which includes rights to future commissions and royalties. The term note is payable in quarterly installments of $0.6 million the first twelve months, $1.3 million the next twelve months, $1.9 million the next twelve months, and $2.5 million the last twenty-four months, with a balloon payment on July 21, 2026. The note is collateralized by substantially all of the Company’s assets, which includes rights to future commissions and royalties. Interest is calculated initially at LIBOR plus 2.25%, then at an interest rate based on the Company's leverage ratio for the preceding period. At September 30, 2022 the Company was accruing interest at LIBOR plus 225 basis points. The interest rate for each leverage ratio tier is as follows: Leverage Ratio Interest Rate < 1.50x LIBOR + 175 bps > 1.50x LIBOR + 200 bps > 2.50x LIBOR + 225 bps > 3.50x LIBOR + 250 bps Maturities of the term note payable for the next five years are as follows ( in thousands ): Amount 2022 1,250 2023 6,875 2024 9,375 2025 10,000 2026 68,125 Total $ 95,625 The Company’s note payable agreement contains certain restrictions and covenants. Under these restrictions, the Company is limited in the amount of debt incurred and distributions payable. As of September 30, 2022, the Company's maximum allowable trailing twelve months debt-to-EBITDA ratio, as defined by the credit agreement, was 4x. In addition, the credit agreement contains certain change of control provisions that, if broken, would trigger a default. Finally, the Company must maintain certain financial ratios. As of September 30, 2022, the Company was in compliance with these covenants. Because of both instruments’ variable interest rate, the note payable balance at September 30, 2022 and December 31, 2021, approximates fair value using Level 2 inputs, described below. The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets. • Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset. • Level 3—Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes GSHD is the sole managing member of GF, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, GF is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by GF is passed through to and included in the taxable income or loss of its members, including GSHD, on a pro rata basis. GSHD is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to GSHD's allocable share of income of GF. Income tax expense (benefit) In accordance with ASC 740, Income Taxes, each interim period is considered integral to the annual period, and tax expense is measured using an estimated annual effective tax rate. An entity is required to record income tax expense each quarter based on its best estimate of the annual effective tax rate for the full fiscal year and use that rate to provide for income taxes on a current year-to-date basis, as adjusted for discrete taxable events that occur during the interim periods. If, however, the entity is unable to reliably estimate its annual effective tax rate, then the actual effective tax rate for the year-to-date may be the best estimate of the entity’s annual effective tax rate. For the nine months ended September 30, 2022, the Company determined that it was unable to make a reliable estimate of its annual effective tax rate due to the sensitivity of the rate as it relates to its forecasted full year 2022 results. Therefore, the Company recorded a tax expense for the nine months ended September 30, 2022 based on its actual effective tax rate for the nine months ended September 30, 2022. Provision for/(benefit from) income taxes for the three and nine months ended September 30, 2022 was $(0.7) million and $(0.1) million compared to $(2.6) million and $(2.6) million for the three and nine months ended September 30, 2021, respectively. The effective tax rate was (28)% and 179% for the three and nine months ended September 30, 2022 and (92)% and (55)% for the three and nine months ended September 30, 2021. The increase in the effective tax rate for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021 was primarily due to a increase in exercises of employee stock options. Deferred taxes Deferred tax assets at September 30, 2022 were $140.2 million compared to $125.7 million at December 31, 2021. The primary contributing factor to the increase in deferred tax assets is additional redemptions of LLC Units of GF for shares of Class A common stock of GSHD during the nine months ended September 30, 2022. Tax Receivable Agreement GF intends to make an election under Section 754 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”) effective for each taxable year in which a redemption or exchange of LLC Units and corresponding Class B common stock for shares of Class A common stock occurs. Future taxable redemptions or exchanges are expected to result in tax basis adjustments to the assets of GF that will be allocated to the Company and thus produce favorable tax attributes. These tax attributes would not be available to GSHD in the absence of those transactions. The anticipated tax basis adjustments are expected to reduce the amount of tax that GSHD would otherwise be required to pay in the future. GSHD entered into a tax receivable agreement with the Pre-IPO LLC Members on May 1, 2018 that provides for the payment by GSHD to the Pre-IPO LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that GSHD actually realizes as a result of (i) any increase in tax basis in GSHD's assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. During the three and nine months ended September 30, 2022, an aggregate of 491,938 and 707,395 LLC Units were redeemed by the Pre-IPO LLC Members for newly issued shares of Class A common stock. In connection with these redemptions, GSHD received 491,938 and 707,395 LLC Units, which resulted in an increase in the tax basis of its investment in GF subject to the provisions of the tax receivable agreement. The Company recognized a liability for the TRA Payments due to the Pre-IPO LLC Members, representing 85% of the aggregate tax benefits the Company expects to realize from the tax basis increases related to the redemptions of LLC Units, after concluding it was probable that such TRA Payments would be paid based on its estimates of future taxable income. As of September 30, 2022, the total amount of TRA Payments due to the Pre-IPO LLC Members under the tax receivable agreement was $112.8 million, of which $0.4 million was current and included in Accounts payables and accrued expenses on the Condensed Consolidated Balance Sheet. Future exchanges of LLC Units for Class A common stock will result in additional TRA payments. Uncertain tax positions GSHD has determined there are no material uncertain tax positions as of September 30, 2022. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Class A Common Stock GSHD has a total of 21,202 shares of its Class A common stock outstanding at September 30, 2022. Each share of Class A common stock holds economic rights and entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Class B Common Stock GSHD has a total of 16,201 shares of its Class B common stock outstanding at September 30, 2022. Each share of Class B common stock has no economic rights but entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to GSHD's shareholders for their vote or approval, except as otherwise required by applicable law, by agreement, or by GSHD's certificate of incorporation. Earnings Per Share The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three and nine months ended September 30, 2022 and 2021, divided by the basic weighted average number of Class A common stock as of September 30, 2022 and 2021 (in thousands, except per share amounts) . Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GSHD by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. The Company has not included the effects of conversion of Class B shares to Class A shares in the diluted EPS calculation using the "if-converted" method, because doing so has no impact on diluted EPS. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Income (loss) before taxes $ 2,374 $ 2,793 $ (58) $ 4,769 Less: income (loss) before taxes attributable to non-controlling interests 1,061 1,332 (18) 2,288 Income (loss) before taxes attributable to GSHD 1,313 1,461 (40) 2,481 Less: income tax expense (benefit) attributable to GSHD (666) (2,575) (104) (2,646) Net income attributable to GSHD $ 1,979 $ 4,036 $ 64 $ 5,127 Denominator: Weighted average shares of Class A common stock outstanding - basic 20,892 19,559 20,531 18,903 Effect of dilutive securities: Stock options (1) 677 1,647 899 1,667 Weighted average shares of Class A common stock outstanding - diluted 21,569 21,206 21,430 20,570 Earnings per share of Class A common stock - basic $ 0.09 $ 0.21 $ — $ 0.27 Earnings per share of Class A common stock - diluted $ 0.09 $ 0.19 $ — $ 0.25 (1) 2,388 and 1,947 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and nine months ended September 30, 2022, respectively, because the effect would have been anti-dilutive. 41 and 66 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and nine months ended September 30, 2021, respectively, because the effect would have been anti-dilutive. |
Non-controlling interest
Non-controlling interest | 9 Months Ended |
Sep. 30, 2022 | |
Noncontrolling Interest [Abstract] | |
Non-controlling interest | Non-controlling interest GSHD is the sole managing member of GF and, as a result, it consolidates the financial results of GF. GSHD reports a non-controlling interest representing the economic interest in GF held by the other members of GF. Under the amended and restated Goosehead Financial, LLC Agreement, the Pre-IPO LLC Members have the right, from and after the completion of the Offering (subject to the terms of the amended and restated Goosehead Financial, LLC Agreement), to require GSHD to redeem all or a portion of their LLC Units for, at GSHD's election, newly-issued shares of Class A common stock on a one-for-one basis or a cash payment equal to the volume weighted average market price of one share of GSHD's Class A common stock for each LLC Unit redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the amended and restated Goosehead Financial, LLC Agreement. Additionally, in the event of a redemption request by a Pre-IPO LLC Member, GSHD may, at its option, effect a direct exchange of cash or Class A common stock for LLC Units in lieu of such a redemption. Shares of Class B common stock will be cancelled on a one-for-one basis if GSHD, at the election of a Pre-IPO LLC Member, redeems or exchanges LLC Units of such Pre-IPO LLC Member pursuant to the terms of the amended and restated Goosehead Financial, LLC Agreement. Except for transfers to GSHD pursuant to the amended and restated Goosehead Financial, LLC Agreement or to certain permitted transferees, the Pre-IPO LLC Members are not permitted to sell, transfer or otherwise dispose of any LLC Units or shares of Class B common stock. During the three and nine months ended September 30, 2022, an aggregate of 492 thousand and 707 thousand LLC Units were redeemed by the non-controlling interest holders. Pursuant to the GF LLC Agreement, GSHD issued 492 thousand and 707 thousand shares of Class A common stock in connection with these redemptions and received 492 thousand and 707 thousand LLC Interests, increasing GSHD's ownership interest in GF. Simultaneously, and in connection with these redemptions, and 492 thousand and 707 thousand shares of Class B common stock were surrendered and cancelled. The following table summarizes the ownership interest in GF as of September 30, 2022 (in thousands) : 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% The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to GSHD and the non-controlling interest holders. The non-controlling interest holders' weighted average ownership percentage for the three and nine months ended September 30, 2022 was 44.8%. The following table summarizes the effects of changes in ownership in GF on the equity of GSHD for the three and nine months ended September 30, 2022 and 2021 as follows (in thousands) : Three months ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income attributable to Goosehead Insurance Inc. $ 1,979 $ 4,036 $ 64 $ 5,127 Transfers (to) from non-controlling interests: Decrease in additional paid-in capital as a result of the redemption of LLC interests (1,579) (1,144) (2,300) (2,673) Increase in additional paid-in capital as a result of activity under employee stock purchase plan 165 194 556 613 Total effect of changes in ownership interest on equity attributable to Goosehead Insurance Inc. $ 565 $ 3,086 $ (1,680) $ 3,067 |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based CompensationStock option expense was $5.4 million and $16.4 million for the three and nine months ended September 30, 2022. Stock option expense was $1.9 million and $5.6 million for the three and nine months ended September 30, 2021. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Segment InformationThe Company’s Chief Operating Decision Maker, its Chief Executive Officer (“CEO”), reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Management views the Company’s operations and manages its business as one operating segment. Accordingly, the Company determined that it operates in a single reportable segment. All of the Company’s long-lived assets are located in the United States. As a result, beginning with the first quarter of 2022, GSHD has modified the presentation of its segment financial information with retrospective application to all prior periods presented. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements. |
Litigation
Litigation | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | LitigationFrom time to time, GSHD may be involved in various legal proceedings, lawsuits and claims incidental to the conduct of the Company's business. The amount of any loss from the ultimate outcomes is not probable or reasonably estimable. It is the opinion of management that the resolution of outstanding claims will not have a material adverse effect on the financial position or results of operations of the Company. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn October 11, 2022, the Company paid down the $25.0 million drawn on the revolving credit facility. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Combination | All intercompany accounts and transactions have been eliminated in consolidation. |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include all of the annual disclosures required by accounting principles generally accepted in the United States of America ("GAAP"). However, in the opinion of management, these statements include all adjustments, consisting of normal recurring adjustments, which are necessary for a fair presentation of the condensed consolidated financial positions at September 30, 2022 and December 31, 2021, the condensed consolidated results of operations, stockholders' equity and statements of cash flows for the three and nine months ended September 30, 2022 and 2021. The interim period condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements that are included in the Annual Report on Form 10-K. In accordance with Accounting Standards Codification 280 "Segment Reporting", and in the first quarter of 2022, the Company began reporting one operating segment due to changes in how the Company's chief operating decision maker assesses the Company's performance and allocates resources. See Note 12 "Segment Reporting". |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates as more information becomes known. |
Income Taxes | Income Taxes The Company accounts for income taxes pursuant to the asset and liability method which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. |
Reclassification | Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. |
Restricted Cash | Restricted CashThe Company holds premiums received from the insured, but not yet remitted to the insurance Carrier in a fiduciary capacity. |
Recently Adopted Accounting Pronouncements | Recently adopted accounting pronouncements Simplifying the Accounting for Income Taxes (ASU 2019-12) : In 2019, the Financial Accounting Standards Board issued ASU 2019-12 to simplify the accounting for income taxes. The guidance primarily addresses how to (1) recognize a deferred tax liability after we transition to or from the equity method of accounting, (2) evaluate if a step-up in the tax basis of goodwill is related to a business combination or is a separate transaction, (3) recognize all of the effects of a change in tax law in the period of enactment, including adjusting the estimated annual tax rate, and (4) include the amount of tax based on income in the income tax provision and any incremental amount as a tax not based on income for hybrid tax regimes. We adopted the guidance in the first quarter of 2021. The adoption did not have a material impact on our condensed consolidated financial statements or related disclosures. Reference Rate Reform (ASU 2020-04) : In March 2020, the Financial Accounting Standards Board issued ASU 2020-04. Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP if certain criteria are met to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued. ASU 2020-04 is effective from March 12, 2020 through December 31, 2022. A substantial portion of our indebtedness bears interest at variable interest rates, primarily based on USD-LIBOR. The adoption of ASU 2020-04 did not have a material impact on our condensed consolidated financial statements. The standard will ease, if warranted, the administrative requirements for accounting for the future effects of the rate reform. Our debt agreement contains a provision to move to the Secured Overnight Financing Rate ("SOFR") if or when LIBOR is phased out. |
Framework for Measuring Fair Value | The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets. • Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset. • Level 3—Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Restrictions on Cash and Cash Equivalents | The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 (in thousands) : September 30, 2022 2021 Cash and cash equivalents $ 46,107 $ 25,512 Restricted cash 2,263 1,179 Cash and cash equivalents, and restricted cash $ 48,370 $ 26,691 |
Schedule of Reconciliation of Cash and Restricted Cash | The following is a reconciliation of our cash and restricted cash balances as presented in the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 (in thousands) : September 30, 2022 2021 Cash and cash equivalents $ 46,107 $ 25,512 Restricted cash 2,263 1,179 Cash and cash equivalents, and restricted cash $ 48,370 $ 26,691 |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table disaggregates revenue by source (in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 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 |
Schedule of Contract Balances | The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands) : September 30, 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 (1) Cost to obtain franchise contracts is included in Other assets on the condensed consolidated balance sheets. (2) Includes both the current and long term portion of this balance. (3) Initial Franchise Fees to be recognized over the life of the contract. Significant changes in contract liabilities are as follows (in thousands) : Contract liabilities at December 31, 2021 $ 48,608 Revenue recognized during the period (7,943) New deferrals (1) 10,094 Contract liabilities at September 30, 2022 $ 50,759 (1) Initial Franchise Fees where the consideration is received from the franchisee for services which are to be transferred to the Franchisee over the expected life of the Franchise Agreement |
Franchise Fees Receivable (Tabl
Franchise Fees Receivable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Schedule of Franchise Fees Receivable | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following (in thousands) : September 30, 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 (1) Includes both the current and long term portion of this balance Activity in the allowance for uncollectible Agency Fees was as follows (in thousands) : Balance at December 31, 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 |
Schedule of Allowance for Uncollectible Franchise Fees | Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : 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 |
Allowance for Uncollectible A_2
Allowance for Uncollectible Agency Fees (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Schedule of Allowance for Uncollectible Agency Fees | The balance of Franchise fees receivable included in Receivable from franchisees consisted of the following (in thousands) : September 30, 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 (1) Includes both the current and long term portion of this balance Activity in the allowance for uncollectible Agency Fees was as follows (in thousands) : Balance at December 31, 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 |
Property and equipment (Tables)
Property and equipment (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands) : 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 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Interest Rate Dependent of Leverage Ratio | The interest rate for each leverage ratio tier is as follows: Leverage Ratio Interest Rate < 1.50x LIBOR + 175 bps > 1.50x LIBOR + 200 bps > 2.50x LIBOR + 225 bps > 3.50x LIBOR + 250 bps |
Schedule of Maturities of Note Payable | Maturities of the term note payable for the next five years are as follows ( in thousands ): Amount 2022 1,250 2023 6,875 2024 9,375 2025 10,000 2026 68,125 Total $ 95,625 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the three and nine months ended September 30, 2022 and 2021, divided by the basic weighted average number of Class A common stock as of September 30, 2022 and 2021 (in thousands, except per share amounts) . Diluted earnings per share of Class A common stock is computed by dividing net income attributable to GSHD by the weighted average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. The Company has not included the effects of conversion of Class B shares to Class A shares in the diluted EPS calculation using the "if-converted" method, because doing so has no impact on diluted EPS. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Income (loss) before taxes $ 2,374 $ 2,793 $ (58) $ 4,769 Less: income (loss) before taxes attributable to non-controlling interests 1,061 1,332 (18) 2,288 Income (loss) before taxes attributable to GSHD 1,313 1,461 (40) 2,481 Less: income tax expense (benefit) attributable to GSHD (666) (2,575) (104) (2,646) Net income attributable to GSHD $ 1,979 $ 4,036 $ 64 $ 5,127 Denominator: Weighted average shares of Class A common stock outstanding - basic 20,892 19,559 20,531 18,903 Effect of dilutive securities: Stock options (1) 677 1,647 899 1,667 Weighted average shares of Class A common stock outstanding - diluted 21,569 21,206 21,430 20,570 Earnings per share of Class A common stock - basic $ 0.09 $ 0.21 $ — $ 0.27 Earnings per share of Class A common stock - diluted $ 0.09 $ 0.19 $ — $ 0.25 (1) 2,388 and 1,947 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and nine months ended September 30, 2022, respectively, because the effect would have been anti-dilutive. 41 and 66 stock options were excluded from the computation of diluted earnings per share of Class A common stock for the three and nine months ended September 30, 2021, respectively, because the effect would have been anti-dilutive. |
Non-controlling interest (Table
Non-controlling interest (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Noncontrolling Interest [Abstract] | |
Schedule of Ownership Interests | The following table summarizes the ownership interest in GF as of September 30, 2022 (in thousands) : 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% |
Effects of Changes in Ownership Interests on Equity | The following table summarizes the effects of changes in ownership in GF on the equity of GSHD for the three and nine months ended September 30, 2022 and 2021 as follows (in thousands) : Three months ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net income attributable to Goosehead Insurance Inc. $ 1,979 $ 4,036 $ 64 $ 5,127 Transfers (to) from non-controlling interests: Decrease in additional paid-in capital as a result of the redemption of LLC interests (1,579) (1,144) (2,300) (2,673) Increase in additional paid-in capital as a result of activity under employee stock purchase plan 165 194 556 613 Total effect of changes in ownership interest on equity attributable to Goosehead Insurance Inc. $ 565 $ 3,086 $ (1,680) $ 3,067 |
Organization - Narrative (Detai
Organization - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 location franchise | Sep. 30, 2021 franchise location | Sep. 30, 2022 franchise location | Sep. 30, 2021 franchise location | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Corporate-owned locations (in locations) | location | 12 | 12 | 12 | 12 |
Franchise locations sold (in franchises) | 144 | 92 | ||
Operating franchise locations (in franchises) | 1,403 | 1,139 | 1,403 | 1,139 |
Franchises purchased (in franchises) | 0 | 0 | 0 | 0 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2022 segment | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | |
Accounting Policies [Abstract] | |||
Number of operating segments | segment | 1 | 1 | |
Restricted cash | $ | $ 2,263 | $ 1,179 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 46,107 | $ 28,526 | $ 25,512 | |
Restricted cash | 2,263 | 1,179 | ||
Cash and cash equivalents, and restricted cash | $ 48,370 | $ 30,479 | $ 26,691 | $ 26,236 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Amortization period | 10 years |
Franchise license revenue period | 10 years |
Weighted average remaining amortization period for contract liabilities | 7 years 10 months 24 days |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 57,687 | $ 41,681 | $ 151,987 | $ 111,082 |
Renewal Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 16,485 | 10,969 | 41,233 | 29,036 |
New Business Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 6,215 | 6,013 | 18,312 | 16,573 |
Agency Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2,740 | 3,050 | 8,491 | 8,579 |
Contingent Commissions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,962 | 2,388 | 5,640 | 6,819 |
Renewal Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 21,574 | 13,206 | 54,446 | 33,622 |
New Business Royalty Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 4,866 | 4,003 | 13,979 | 10,840 |
Initial Franchise Fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,056 | 1,680 | 7,943 | 4,570 |
Other Franchise Revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 426 | 71 | 931 | 202 |
Interest income | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 363 | 301 | 1,012 | 841 |
Transferred at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 25,440 | 20,032 | 68,036 | 54,188 |
Transferred over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 32,247 | $ 21,649 | $ 83,951 | $ 56,894 |
Revenue - Contract Balances (De
Revenue - Contract Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |||
Cost to obtain franchise contracts | $ 3,007 | $ 1,973 | |
Increase (decrease) in cost to obtain franchise contracts | 1,034 | ||
Commissions and agency fees receivable, net | 11,271 | 12,056 | |
Increase (decrease) in commissions and agency fees receivable, net | (785) | ||
Receivables from franchisees | 31,055 | 29,673 | |
Increase (decrease) in receivables from franchisees | 1,382 | ||
Contract liabilities | 50,759 | $ 48,608 | |
Increase (decrease) in contract liability | 2,151 | $ 10,408 | |
Contract Liability [Roll Forward] | |||
Contract liabilities at December 31, 2021 | 48,608 | ||
Revenue recognized during the period | (7,943) | ||
New deferrals | 10,094 | ||
Contract liabilities at September 30, 2022 | $ 50,759 |
Franchise Fees Receivable - Bal
Franchise Fees Receivable - Balance of Franchise Fees Receivable (Details) - Franchise Fees Receivable - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Franchise fees receivable | $ 41,161 | $ 40,171 | ||
Less: Unamortized discount | (11,041) | (9,518) | ||
Less: Allowance for uncollectible franchise fees | (562) | (303) | $ (181) | $ (149) |
Net franchise fees receivable | $ 29,558 | $ 30,350 |
Franchise Fees Receivable - Rol
Franchise Fees Receivable - Roll-Forward of Allowance (Details) - Franchise Fees Receivable - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 303 | $ 149 |
Charges to bad debts | 3,099 | 516 |
Write offs | (2,840) | (484) |
Ending balance | $ 562 | $ 181 |
Allowance for Uncollectible A_3
Allowance for Uncollectible Agency Fees - Roll-Forward of Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Charges to bad debts | $ 2,306 | $ 732 | $ 4,762 | $ 1,825 |
Agency Fees | ||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 489 | 468 | ||
Charges to bad debts | 1,663 | 1,309 | ||
Write offs | (1,658) | (1,270) | ||
Ending balance | $ 494 | $ 507 | $ 494 | $ 507 |
Property and equipment (Details
Property and equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Total | $ 48,907 | $ 37,218 | |
Less accumulated depreciation | (13,688) | (12,285) | |
Property and equipment, net | 35,219 | 24,933 | |
Depreciation | 4,500 | $ 3,000 | |
Furniture & fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Total | 7,784 | 7,283 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total | 4,033 | 3,369 | |
Network equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total | 371 | 514 | |
Phone system | |||
Property, Plant and Equipment [Line Items] | |||
Total | 326 | 937 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total | $ 36,393 | $ 25,115 |
Debt - Narrative (Details)
Debt - Narrative (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Jul. 21, 2021 USD ($) | Jul. 20, 2021 USD ($) | |
Line of Credit | |||
Debt Instrument [Line Items] | |||
Additional commitments | $ 25 | ||
Letter of credit | $ 0.2 | ||
Remaining borrowing availability | $ 24.8 | ||
Line of Credit | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing availability | 50 | $ 25 | |
Interest Rate | 2.50% | ||
Revolver balance | $ 25 | ||
Notes Payable to Bank | |||
Debt Instrument [Line Items] | |||
Principal amount of debt | $ 80 | ||
Secured Debt | |||
Debt Instrument [Line Items] | |||
Principal amount of debt | $ 100 | ||
EBITDA ratio | 4 | ||
Secured Debt | Debt Repayment, First Twelve Months | |||
Debt Instrument [Line Items] | |||
Periodic payment | $ 0.6 | ||
Secured Debt | Debt Repayment, Next 12 Months | |||
Debt Instrument [Line Items] | |||
Periodic payment | 1.3 | ||
Secured Debt | Debt Repayment, Following 12 Months | |||
Debt Instrument [Line Items] | |||
Periodic payment | 1.9 | ||
Secured Debt | Debt Repayment, Last 24 Months | |||
Debt Instrument [Line Items] | |||
Periodic payment | $ 2.5 | ||
Secured Debt | LIBOR | |||
Debt Instrument [Line Items] | |||
Interest Rate | 2.25% |
Debt - Leverage (Details)
Debt - Leverage (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Less than 1.50 | |
Debt Instrument [Line Items] | |
Leverage Ratio | 1.50 |
Less than 1.50 | LIBOR | |
Debt Instrument [Line Items] | |
Interest Rate | 1.75% |
Greater than 1.50 | |
Debt Instrument [Line Items] | |
Leverage Ratio | 1.50 |
Greater than 1.50 | LIBOR | |
Debt Instrument [Line Items] | |
Interest Rate | 2% |
Greater than 2.50 | |
Debt Instrument [Line Items] | |
Leverage Ratio | 2.50 |
Greater than 2.50 | LIBOR | |
Debt Instrument [Line Items] | |
Interest Rate | 2.25% |
Greater than 3.50 | |
Debt Instrument [Line Items] | |
Leverage Ratio | 3.50 |
Greater than 3.50 | LIBOR | |
Debt Instrument [Line Items] | |
Interest Rate | 2.50% |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Note Payable (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2022 | $ 1,250 |
2023 | 6,875 |
2024 | 9,375 |
2025 | 10,000 |
2026 | 68,125 |
Total | $ 95,625 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Income Tax Contingency [Line Items] | |||||
Taxes | $ (666,000) | $ (2,575,000) | $ (104,000) | $ (2,646,000) | |
Effective income tax rate | (28.00%) | (92.00%) | 179% | (55.00%) | |
Deferred income taxes, net | $ 140,244,000 | $ 140,244,000 | $ 125,676,000 | ||
Uncertain tax positions | $ 0 | $ 0 | |||
LLC Units | |||||
Income Tax Contingency [Line Items] | |||||
Redemption of LLC Units (in shares) | 492,000 | 707,000 | |||
Pre-IPO LLC | LLC Units | |||||
Income Tax Contingency [Line Items] | |||||
Redemption of LLC Units (in shares) | 491,938 | 707,395 | |||
Tax Receivable Agreement | |||||
Income Tax Contingency [Line Items] | |||||
Percentage due to related parties | 85% | ||||
Tax Receivable Agreement | Pre-IPO LLC | |||||
Income Tax Contingency [Line Items] | |||||
Percentage due to related parties | 85% | ||||
Due to related parties | $ 112,800,000 | $ 112,800,000 | |||
Due to related parties, current | $ 400,000 | $ 400,000 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) | Sep. 30, 2022 vote shares | Dec. 31, 2021 shares |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Common stock shares outstanding (in shares) | shares | 21,202,000 | 20,198,000 |
Vote per share (in votes) | vote | 1 | |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Common stock shares outstanding (in shares) | shares | 16,201,000 | 16,909,000 |
Vote per share (in votes) | vote | 1 |
Stockholders' Equity - Basic an
Stockholders' Equity - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Pro forma earnings per share: | ||||
Income (loss) before taxes | $ 2,374 | $ 2,793 | $ (58) | $ 4,769 |
Less: income (loss) before taxes attributable to non-controlling interests | 1,061 | 1,332 | (18) | 2,288 |
Income (loss) before taxes attributable to GSHD | 1,313 | 1,461 | (40) | 2,481 |
Less: income tax expense (benefit) attributable to GSHD | (666) | (2,575) | (104) | (2,646) |
Net income attributable to GSHD | $ 1,979 | $ 4,036 | $ 64 | $ 5,127 |
Weighted average shares of Class A common stock outstanding - basic (in shares) | 20,892 | 19,559 | 20,531 | 18,903 |
Effect of dilutive securities, stock options (in shares) | 677 | 1,647 | 899 | 1,667 |
Weighted average shares of Class A common stock outstanding - diluted (in shares) | 21,569 | 21,206 | 21,430 | 20,570 |
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.09 | $ 0.21 | $ 0 | $ 0.27 |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.09 | $ 0.19 | $ 0 | $ 0.25 |
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,388 | 41 | 1,947 | 66 |
Class A Common stock | ||||
Pro forma earnings per share: | ||||
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.09 | $ 0.21 | $ 0 | $ 0.27 |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.09 | $ 0.19 | $ 0 | $ 0.25 |
Non-controlling interest - Narr
Non-controlling interest - Narrative (Details) shares in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 shares | Sep. 30, 2022 shares | |
Noncontrolling interest holders | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest held by non-controlling interest holders | 0.448 | 0.448 |
LLC Units | ||
Noncontrolling Interest [Line Items] | ||
Conversion ratio | 1 | |
Redemption of LLC Units (in shares) | 492 | 707 |
LLC Units | Noncontrolling interest holders | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 492 | 707 |
Class A Common stock | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 492 | 707 |
Class B Common Stock | ||
Noncontrolling Interest [Line Items] | ||
Redemption of LLC Units (in shares) | 492 | 707 |
Non-controlling interest - Owne
Non-controlling interest - Ownership interests (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2022 shares | |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 37,403 |
Noncontrolling interest, ownership percentage | 100% |
Goosehead Financial, LLC | |
Noncontrolling Interest [Line Items] | |
Ownership interest held by Goosehead Insurance, Inc. | 56.70% |
Noncontrolling interest holders | |
Noncontrolling Interest [Line Items] | |
Ownership interest held by non-controlling interest holders | 43.30% |
Parent | |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 21,202 |
Non-controlling interest | |
Noncontrolling Interest [Line Items] | |
Number of LLC units outstanding (in shares) | 16,201 |
Non-controlling interest - Effe
Non-controlling interest - Effect of changes in ownership interests on equity (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Noncontrolling Interest [Line Items] | ||||||||
Net income attributable to Goosehead Insurance Inc. | $ 1,979 | $ 4,036 | $ 64 | $ 5,127 | ||||
Decrease in additional paid-in capital as a result of the redemption of LLC interests | 0 | $ 0 | $ 0 | 0 | $ 0 | $ 0 | ||
Increase in additional paid-in capital as a result of activity under employee stock purchase plan | 165 | 177 | 214 | 194 | 214 | 205 | ||
Parent | ||||||||
Noncontrolling Interest [Line Items] | ||||||||
Net income attributable to Goosehead Insurance Inc. | 1,979 | 4,036 | 64 | 5,127 | ||||
Decrease in additional paid-in capital as a result of the redemption of LLC interests | (1,579) | (377) | (344) | (1,144) | (1,280) | (249) | (2,300) | (2,673) |
Increase in additional paid-in capital as a result of activity under employee stock purchase plan | 165 | $ 177 | $ 214 | 194 | $ 214 | $ 205 | 556 | 613 |
Total effect of changes in ownership interest on equity attributable to Goosehead Insurance Inc. | $ 565 | $ 3,086 | $ (1,680) | $ 3,067 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 5.4 | $ 1.9 | $ 16.4 | $ 5.6 |
Segment Information - Narrative
Segment Information - Narrative (Details) - segment | 3 Months Ended | 9 Months Ended |
Mar. 31, 2022 | Sep. 30, 2022 | |
Segment Reporting [Abstract] | ||
Number of operating segments | 1 | 1 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) $ in Millions | Oct. 11, 2022 USD ($) |
Subsequent Event | Revolving Credit Facility | |
Subsequent Event [Line Items] | |
Repayments of long-term lines of credit | $ 25 |