Goosehead Insurance, Inc.: Form 10-Q for the period ended Mar 31, 2026

OVERVIEW

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Form 10-Q. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk factors” and elsewhere in this report and in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

We are a rapidly growing personal lines independent insurance agency, reinventing the traditional approach to distributing personal lines products and services throughout the United States. We were founded with one vision in mind: to provide clients with superior insurance coverage at the best available price and in a timely manner. By leveraging our differentiated business model and innovative technology platform, we are able to deliver a superior insurance experience to our clients.

Financial Highlights for the First Quarter of 2026:

• Total revenue increased 23% from the first quarter of 2025 to $93.1 million
• Core Revenue* increased by 15% from the first quarter of 2025 to $79.5 million
• Total Written Premiums placed increased 13% from the prior-year period to $1.1 billion
• Net income increased by $5.4 million from the first quarter of 2025 to $8.0 million, or 9% of total revenues
• Adjusted EBITDA* increased 57% from the first quarter of 2025 to $24.4 million, or 26% of total revenues
• Basic and diluted earnings per share were $0.20 and $0.19, respectively, and Adjusted EPS* was $0.37 per share for the three months ended March 31, 2026
• Policies in Force increased 14% from March 31, 2025 to 1,973,000 at March 31, 2026
• Corporate sales headcount increased 13% from March 31, 2025 to 482 at March 31, 2026
• As of March 31, 2026, 275 of these Corporate sales agents had less than one year of tenure and 207 had greater than one year of tenure
• Total operating franchises decreased 13% from March 31, 2025 to 956 at March 31, 2026
• As of March 31, 2026, 77 operating Franchisees had less than one year of tenure and 879 operating Franchisees had greater than one year of tenure
• Total Franchise agents increased 3% from March 31, 2025 to 2,150 at March 31, 2026

*Core Revenue, Adjusted EBITDA and Adjusted EPS are non-GAAP measures. Reconciliation of Core Revenue to total revenue, Adjusted EBITDA to net income and Adjusted EPS to EPS, the most directly comparable financial measures presented in accordance with GAAP, are set forth under "Key performance indicators".

Certain income statement line items

Revenues

For the three months ended March 31, 2026, revenue increased by 23% to $93.1 million from $75.6 million for the three months ended March 31, 2025. Total Written Premium, which we believe is the best leading indicator of future revenue, increased 13% for the three months ended March 31, 2026 to $1.1 billion from $1.0 billion for the three months ended March 31, 2025. Total Written Premiums drive our current and future Core Revenue and give us potential opportunities to earn Ancillary Revenue in the form of Contingent Commissions.

Our various revenue streams do not equally contribute to the long-term value of Goosehead. For instance, Renewal Revenue and Renewal Royalty Fees are more predictable and have higher margin profiles, thus are higher quality revenue streams for the Company. Alternatively, Contingent Commissions, while high margin, are unpredictable and dependent on insurance company underwriting and forces of nature and thus are lower quality revenue for the Company. Our revenue streams can be viewed in three distinct categories: Core Revenue, Cost Recovery Revenue, and Ancillary Revenue, which are non-GAAP measures. A reconciliation of Core Revenue, Cost Recovery Revenue, and Ancillary Revenue to total revenue, the most directly comparable financial measure presented in accordance with GAAP, are set forth under "Key performance indicators".

Core Revenue:

• Renewal Commissions - highly predictable, higher-margin revenue stream, which is managed by our service team.
• Renewal Royalty Fees - highly predictable, higher-margin revenue stream, which is managed by our service team. For policies in their first renewal term, we see an increase in our share of royalties from 20% to 50% of the commission paid by the Carriers.
• New Business Commissions - predictable based on agent headcount and consistent ramp-up of agents, but lower margin than Renewal Commissions because of higher commissions paid to agents and higher back-office costs associated with policies in their first term. This revenue stream has predictably converted into higher-margin Renewal Commissions historically, and we expect this to continue moving forward.
• New Business Royalty Fees - predictable based on franchise count and consistent ramp-up of franchises, but lower margin than Renewal Royalty Fees because the Company only receives a royalty fee of 20% on the commissions paid by the Carrier in the first term of every policy and incurs higher back-office costs associated with policies in their first term. This revenue stream has predictably converted into higher-margin Renewal Royalty Fees historically, and we expect this to continue moving forward.
• Agency Fees - although predictable based on agent count, Agency Fees do not renew like New Business Commissions and Renewal Commissions.

Cost Recovery Revenue:

• Initial Franchise Fees - one-time Cost Recovery Revenue stream per franchise unit that covers the Company's costs to recruit, train, onboard, and support the franchise for the first year. These fees are fully earned and non-refundable when a franchise attends our initial training.
• Interest Income - like Initial Franchise Fees, interest income is a Cost Recovery Revenue stream that reimburses the Company for those franchises on a payment plan.

Ancillary Revenue:

• Contingent Commissions - although high margin, Contingent Commissions are unpredictable and susceptible to weather events and Carrier underwriting results. Management does not rely on Contingent Commissions for operating cash flow or budget planning.
• Other Franchise Revenues - book transfer fees, marketing investments from Carriers and other items that are unpredictable and supplemental to other revenue streams.

We discuss below the breakdown of our revenue by stream:

(in thousands)

(1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the condensed consolidated statements of operations.

(2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues are included in "Franchise revenues" as shown on the condensed consolidated statements of operations.

Consolidated results of operations

The following is a discussion of our consolidated results of operations for each of the three months ended March 31, 2026 and 2025. This information is derived from our accompanying condensed consolidated financial statements prepared in accordance with GAAP.

The following table summarizes our results of operations (in thousands):

Revenues

For the three months ended March 31, 2026 revenue increased 23% to $93.1 million from $75.6 million for the three months ended March 31, 2025.

Commissions and agency fees

Commissions and agency fees consist of new business commissions, renewal commissions, agency fees, and contingent commissions.

The following table sets forth these revenue streams by amount and as a percentage of total commissions and agency fees for the periods indicated (in thousands):

Renewal Commissions increased by $1.2 million, or 7%, to $18.2 million for the three months ended March 31, 2026 from $17.0 million for the three months ended March 31, 2025. The increase during the three months ended March 31, 2026 was primarily due to an increase in the number of policies in their renewal term compared to the prior period.

New Business Commissions increased by $1.7 million, or 29%, to $7.5 million for the three months ended March 31, 2026 from $5.8 million for the three months ended March 31, 2025. The increase during the three months ended March 31, 2026 was primarily driven by an increase in the number of Corporate sales agents, as well as an increase in the per-agent productivity in the period.

Revenue from Agency Fees increased by $0.1 million, or 6%, to $2.4 million for the three months ended March 31, 2026 from $2.2 million for the three months ended March 31, 2025. The increase in Agency Fees during the three months ended March 31, 2026 was primarily attributable to an increase in the number of policies written where an agency fee was charged.

Revenue from Contingent Commissions increased by $6.2 million to $10.7 million for the three months ended March 31, 2026 from $4.5 million for the three months ended March 31, 2025. The increase during the three months ended March 31, 2026 was primarily attributable to changes in the estimated transaction price for variable consideration under contingent commission arrangements which was previously constrained and recognized as the uncertainty was resolved.

Franchise revenues

Franchise Revenues consist of Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues.

The following table sets forth these revenue streams by amount and as a percentage of franchise revenues for the periods indicated (in thousands):

29

Revenue from Renewal Royalty Fees increased by $6.4 million, or 17%, to $43.6 million for the three months ended March 31, 2026 from $37.2 million for the three months ended March 31, 2025. The increase in revenue from Renewal Royalty Fees during the three months ended March 31, 2026 was primarily attributable to an increase in the number of policies in the renewal term, assisted by client retention of 85%.

Revenue from New Business Royalty Fees increased by $1.0 million, or 14%, to $7.9 million for the three months ended March 31, 2026 from $6.9 million for the three months ended March 31, 2025. The increase in revenue from New Business Royalty Fees during the three months ended March 31, 2026 was primarily attributable to an increase in the number of franchise agents and an increase in franchise productivity.

Revenue from Initial Franchise Fees increased at $0.3 million, or 20%, to $1.6 million for the three months ended March 31, 2026 from $1.3 million for the three months ended March 31, 2025. The increase in Revenue from Initial Franchise Fees during the three months ended March 31, 2026 was primarily attributable to higher turnover of franchises during the period, which accelerates recognition of Initial Franchise Fees for franchises that were terminated or transferred during the period.

Interest income

Interest income decreased by $0.1 million, or 38%, to $0.1 million for the three months ended March 31, 2026 from $0.2 million for the three months ended March 31, 2025. The decrease in interest income during the three months ended March 31, 2026 was primarily attributable to fewer franchises operating under the payment plan option during the period.

Expenses

Employee compensation and benefits

Employee compensation and benefits expenses increased by $2.2 million, or 5%, to $50.5 million for the three months ended March 31, 2026 from $48.3 million for the three months ended March 31, 2025. The increase in employee compensation during the three months ended March 31, 2026 was primarily related to investments in corporate producers and technology functions.

General and administrative expenses

General and administrative expenses increased by $6.4 million, or 37%, to $24.0 million for the three months ended March 31, 2026 from $17.6 million for the three months ended March 31, 2025. The increase was primarily attributable to increased spending on professional services and technologies, including AI technologies.

Bad debts

Bad debts of $0.4 million for the three months ended March 31, 2026 remained flat as compared to $0.4 million for the three months ended March 31, 2025.

Depreciation and amortization

Depreciation and amortization increased by $0.5 million, or 20%, to $3.2 million for the three months ended March 31, 2026 from $2.7 million for the three months ended March 31, 2025. This increase during the three months ended March 31, 2026 was primarily attributable to increased spending on software development since March 31, 2025.

Interest expense

Interest expense decreased by $0.4 million, or 6%, for the three months ended March 31, 2026 to $5.5 million from $5.8 million for the three months ended March 31, 2025. The primary driver of the decrease during the three months ended March 31, 2026 was our entering into Amendment No. 1 to the 2025 Credit Agreement on July 9, 2025, which reduced the applicable interest rate on our term loan borrowings under the facility by 0.50%.

Other income

Other income consists of interest earned on cash deposits, loss on debt extinguishment, debt modification expense, interest expense on current TRA payments, and remeasurements of our TRA liability. Other income increased by $0.1 million for the three months ended March 31, 2026 primarily attributable to a loss on debt extinguishment in the three months ended March 31, 2025 related to the Company's repayment of the Second Amended and Restated Credit Agreement, offset by a decrease in interest earned on cash deposits.

Tax expense (benefit)

Tax expense (benefit) increased by $3.4 million for the three months ended March 31, 2026, to a tax expense of $1.7 million from a tax (benefit) of $(1.7) million for the three months ended March 31, 2025. The increase in tax expense (benefit) for the three months ended March 31, 2026 was primarily attributable to increases in income before taxes and a decrease in excess tax benefits recognized on stock option exercises as compared to the three months ended March 31, 2025.

Key performance indicators

Our key operating metrics are discussed below:

Total Written Premium

Total Written Premium represents, for any reported period, the total amount of current (non-cancelled) gross premium that is placed by Goosehead with its portfolio of Carriers. Total Written Premium placed is an appropriate measure of operating performance because it reflects growth of our business relative to other insurance agencies.

The following tables show Total Written Premium placed by corporate agents and franchisees for the three months ended March 31, 2026 and 2025 (in thousands).

Policies in Force

Policies in Force means, as of any reported date, the total count of current (non-cancelled) policies placed by Goosehead with its portfolio of Carriers. We believe that Policies in Force is an appropriate measure of operating performance because it reflects growth of our business relative to other insurance agencies.

As of March 31, 2026, we had 2.0 million Policies in Force compared to 1.9 million as of December 31, 2025 and 1.7 million as of March 31, 2025, representing a 4% and a 14% increase, respectively.

NPS

Net Promoter Score (NPS) is calculated based on a single question: “How likely are you to refer Goosehead Insurance to a friend, family member or colleague?” Clients that respond with a 6 or below are Detractors, with a

7 or 8 are Passives, and with a 9 or 10 are Promoters. NPS is calculated by subtracting the percentage of Detractors from the percentage of Promoters. For example, if 50% of respondents were Promoters and 10% were Detractors, NPS is a 40. NPS is a useful gauge of the loyalty of client relationships and can be compared across companies and industries. NPS is calculated on a trailing twelve-month basis.

NPS has decreased to 72 as of March 31, 2026, compared to 87 as of March 31, 2025.

Client Retention

Client Retention is calculated by comparing the number of 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. We believe Client Retention is useful as a measure of how well Goosehead retains clients year-over-year and minimizes defections.

Client Retention of 85% at March 31, 2026 increased when compared to 85% at December 31, 2025, and 84% at March 31, 2025 assisted by moderating premium rate increases. For the trailing twelve months ended March 31, 2026, we retained 89% of the premiums we distributed in the trailing twelve months ended March 31, 2025, which decreased from the 90% premium retention at December 31, 2025. The decline in premium retention is primarily attributable to moderating premium rate increases offset by increasing client retention. Our premium retention rate is higher than our Client Retention rate as a result of both premiums increasing year over year and additional coverages sold by our sales and service teams.

New Business Revenue

New Business Revenue is commissions received from the Carrier, Agency Fees received from clients, and New Business Royalty Fees from franchises relating to policies in their first term.

For the three months ended March 31, 2026, New Business Revenue grew 19% to $17.7 million, from $14.9 million for the three months ended March 31, 2025. Growth in New Business Revenue during the three months ended March 31, 2026 was primarily driven by an increase in the number of Corporate and Franchise sales agents and growth in Corporate and Franchise productivity.

Any diminished capacity of Carriers to place new business (including as a result of 2025 wildfires in Southern California, severe floods in Central Texas, and other natural disasters) could slow the growth of our New Business Revenue in the future.

Renewal Revenue

Renewal Revenue is commissions received from the Carrier and Renewal Royalty Fees from franchises received after the first term of a policy.

For the three months ended March 31, 2026, Renewal Revenue grew 14% to $61.8 million, from $54.2 million for the three months ended March 31, 2025. Growth in Renewal Revenue during the three months ended March 31, 2026 was driven by an increase in the number of policies in the renewal term assisted by Client Retention of 85% at March 31, 2026.

Declines in client retention caused by increases in premium rates could slow the growth of our Renewal Revenue in the future.

Non-GAAP Measures

Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EPS are not measures of financial performance under GAAP and should not be considered substitutes for total revenue, net income, net income margin or earnings per share, which we consider to be the most directly comparable GAAP measures. We refer to these measures as "non-GAAP financial measures." We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax position, depreciation, amortization and certain other items that we believe are not representative of our core business. Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EPS have limitations as analytical tools, and when assessing our operating performance, you should not consider Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, or Adjusted EPS in isolation or as substitutes for total revenue, net income, earnings per share, as applicable, or other consolidated income statement data prepared in accordance with GAAP. Other companies may calculate Core Revenue, Cost Recovery Revenue, Ancillary Revenue, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EPS differently than we do, limiting their usefulness as comparative measures.

Core Revenue

Core Revenue is a supplemental measure of our performance and includes Renewal Commissions, Renewal Royalty Fees, New Business Commissions, New Business Royalty Fees, and Agency Fees. We believe that Core Revenue is an appropriate measure of operating performance because it summarizes all of our revenues from sales of individual insurance policies.

Core Revenue increased by $10.4 million, or 15%, to $79.5 million for the three months ended March 31, 2026 from $69.1 million for the three months ended March 31, 2025. The primary drivers of the increase during the three months ended March 31, 2026 were an increase in policies in their renewal term, assisted by Client Retention of 85%; more new policies written, driven by an increase in the number of Corporate and Franchise sales agents and growth in Franchise productivity.

Cost Recovery Revenue

Cost Recovery Revenue is a supplemental measure of our performance and includes Initial Franchise Fees and Interest Income. We believe that Cost Recovery Revenue is an appropriate measure of operating performance because it summarizes revenues that are viewed by management as cost recovery mechanisms.

Cost Recovery Revenue increased by $0.2 million, or 13%, to $1.7 million for the three months ended March 31, 2026 from $1.5 million for the three months ended March 31, 2025. The primary driver was an increase in terminations and transfers of franchises, resulting in acceleration of initial franchise fee revenue.

Ancillary Revenue

Ancillary Revenue is a supplemental measure of our performance and includes Contingent Commissions and Other Franchise Revenues. We believe that Ancillary Revenue is an appropriate measure of operating performance because it summarizes revenues that are ancillary to our core business.

Ancillary Revenue increased by $6.9 million to $11.9 million for the three months ended March 31, 2026 from $4.9 million for the three months ended March 31, 2025. The increase during the three months ended March 31, 2026 was attributable to an increase in Total Written Premium and the recognition of Contingent Commissions attributable to the year ended December 31, 2025, for which the estimate of the transaction price had been previously constrained and revenue was recognized as the uncertainty was resolved.

Contingent Commissions are inherently volatile as they are based on carrier underwriting profitability and may be impacted by catastrophic losses resulting from natural or man-made disasters.

Adjusted EBITDA

Adjusted EBITDA is a supplemental measure of our performance. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of items that do not relate to business performance. Adjusted EBITDA is defined as net income (the most directly comparable GAAP measure) before interest, income taxes, depreciation and amortization, adjusted to exclude equity-based compensation, impairment expense, and other non-operating items, including, among other things, certain non-cash charges and certain non-recurring or non-operating gains or losses.

Adjusted EBITDA increased by $8.9 million, or 57%, to $24.4 million for the three months ended March 31, 2026 from $15.5 million for the three months ended March 31, 2025. The primary driver of the increase in Adjusted EBITDA during the three months ended March 31, 2026 was growth in total revenue partially offset by an increase in general and administrative expenses excluding impairment expense.

Adjusted EBITDA Margin

Adjusted EBITDA Margin is Adjusted EBITDA as defined above, divided by total revenue. Adjusted EBITDA Margin is helpful in measuring profitability of operations on a consolidated level.

For the three months ended March 31, 2026, Adjusted EBITDA Margin of 26% increased when compared to 21% for the three months ended March 31, 2025 as a result of total revenue growing at a faster rate than employee compensation and benefits and general and administrative expenses, excluding equity-based compensation, impairment expense, and other non-operating items.

Adjusted EPS

Adjusted EPS is a supplemental measure of our performance, defined as earnings per share (the most directly comparable GAAP measure) before non-recurring or non-operating income and expenses. Adjusted EPS is a useful measure to management because it eliminates the impact of items that do not relate to business performance.

GAAP to Non-GAAP Reconciliations

The following tables show a reconciliation from Total Revenues to Core Revenue, Cost Recovery Revenue, and Ancillary Revenue (in thousands):

(1) Renewal Commissions, New Business Commissions, Agency Fees, and Contingent Commissions are included in "Commissions and agency fees" as shown on the condensed consolidated statements of operations.

(2) Renewal Royalty Fees, New Business Royalty Fees, Initial Franchise Fees, and Other Franchise Revenues are included in "Franchise revenues" as shown on the condensed consolidated statements of operations.

The following tables show a reconciliation from net income to Adjusted EBITDA and Adjusted EBITDA margin (in thousands):

(1) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Total Revenue ($24,424/$93,076) and ($15,520/$75,583) for the three months ended March 31, 2026 and 2025, respectively.

The following tables show a reconciliation from basic earnings per share to Adjusted EPS. Note that totals may not sum due to rounding:

(1) Calculated as equity-based compensation divided by sum of weighted average Class A and Class B shares [$6.2 million/(24.3 million + 11.9 million)] for the three months ended March 31, 2026 and [$6.2 million/ (24.8 million + 12.6 million)] for the three months ended March 31, 2025.

Liquidity and capital resources

Liquidity and capital resources

We have managed our historical liquidity and capital requirements primarily through the receipt of revenues. Our primary cash flow activities involve: (1) generating cash flow from Commissions and Agency Fees, which largely includes New Business Commissions, Renewal Commissions, and Agency Fees; (2) generating cash flow from Franchise Revenues operations, which largely includes Initial Franchise Fees and Royalty Fees; (3) borrowings, interest payments and repayments under our credit agreement; and (4) issuing shares of Class A common stock. As of March 31, 2026, our cash and cash equivalents balance was $25.7 million. We have used cash flow from operations primarily to pay compensation and related expenses; general, administrative and other expenses; debt service; special dividends; share repurchases; and distributions to our owners.

Credit agreements

On January 8, 2025, the Company entered into a credit agreement (the "2025 Credit Agreement") providing for an aggregate $300 million term notes payable (the "2025 Initial Term Loan") and $75 million revolving credit facility (the "2025 Revolving Credit Facility"). The 2025 Initial Term Loan matures on January 8, 2032 and the 2025 Revolving Credit Facility matures on January 8, 2030. This credit agreement replaced the prior Second Amended and Restated Credit Agreement, dated July 21, 2021, which was repaid with the proceeds of the 2025 Initial Term Loan and terminated.

On July 9, 2025, the Company entered into Amendment No. 1 to the 2025 Credit Agreement in order to refinance the outstanding balance of the 2025 Initial Term Loan with a new term loan facility (the "Term B-1 Facility"). The amendment reduced the applicable interest rate on our term loan borrowings under the facility by 0.50% to a rate of Term SOFR plus 3.00%. The term note is payable in quarterly installments of $0.7 million, with a balloon payment of $280.5 million on January 8, 2032. The 2025 Credit Agreement is secured by all property owned, leased or operated by the Company except for certain excluded assets.

See "Note 8. Debt" in the condensed consolidated financial statements included herein for additional discussion of the Company's credit facilities.

Comparative cash flows

The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated (in thousands):

Operating activities

Net cash provided by operating activities was $22.9 million for the three months ended March 31, 2026 as compared to net cash provided by operating activities of $15.5 million for the three months ended March 31, 2025. This increase in net cash provided by operating activities was primarily attributable a $5.4 million increase related to net income and an $8.0 million increase related to a reduction in outflows for prepaid expenses.

Investing activities

Net cash used for investing activities was $7.1 million for the three months ended March 31, 2026, compared to net cash used for investing activities of $3.3 million for the three months ended March 31, 2025. This increase was driven by a $2.9 million increase in capitalized software development costs and a $1.1 million increase in purchases of property and equipment.

Financing activities

Net cash used for financing activities was $(24.6) million for the three months ended March 31, 2026 as compared to net cash provided by financing activities of $2.4 million for the three months ended March 31, 2025. This change in net cash provided by (used for) financing activities was primarily driven by share repurchases $(49.8) million, which was partially offset by new borrowings on our revolving credit facility of $26.0 million.

Future sources and uses of liquidity

Our sources of liquidity are (1) cash on hand, (2) net working capital, (3) cash flows from operations and (4) our revolving credit facility. Based on our current expectations, we believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments for the next 12 months following the date of the condensed consolidated financial statements herein.

We expect that our primary uses of liquidity will comprise cash to (1) provide capital to facilitate the organic growth of our business, (2) pay operating expenses, including cash compensation to our employees, (3) make payments under the tax receivable agreement, (4) pay interest and principal due on borrowings under our 2025 Credit Agreement (5) pay income taxes, (6) repurchase shares under our Share Repurchase Program, and (7) when deemed advisable by our board of directors, pay dividends.

Dividend policy

As of March 31, 2026, there have been no material changes to our dividend policy as described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Tax receivable agreement

We entered into a tax receivable agreement with the Pre-IPO LLC Members on May 1, 2018 that provides for the payment by us to the Pre-IPO LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of (i) any increase in tax basis in Goosehead Insurance, Inc.’s assets and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. See "Item 13. Certain relationships and related transactions, and director independence" of the Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Holders of Goosehead Financial, LLC Units (other than Goosehead Insurance, Inc.) may, subject to certain conditions and transfer restrictions described above, redeem or exchange their LLC Units for shares of Class A common stock of Goosehead Insurance, Inc. on a one-for-one basis. Goosehead Financial, LLC 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 for shares of Class A common stock occurs, which is expected to result in increases to the tax basis of the assets of Goosehead Financial, LLC at the time of a redemption or exchange of LLC Units. The redemptions or exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Goosehead Financial, LLC. These increases in tax basis may reduce the amount of tax that Goosehead Insurance, Inc. would otherwise be required to pay in the future. We have entered into a tax receivable agreement with the Pre-IPO LLC Members that provides for the payment by us to the Pre-IPO LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of (i) any increase in tax basis in Goosehead Insurance, Inc.’s assets resulting from (a) the purchase of LLC Units from any of the Pre-IPO LLC Members using the net proceeds from any future offering, (b) redemptions or exchanges by the Pre-IPO LLC Members of LLC Units for shares of our Class A common stock or (c) payments under the tax receivable agreement and (ii) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. This payment obligation is an obligation of Goosehead Insurance, Inc. and not of Goosehead Financial, LLC. For purposes of the tax receivable agreement, the cash tax savings in income tax will be computed by comparing the actual income tax liability of Goosehead Insurance, Inc. (calculated with certain assumptions) to the amount of such taxes that Goosehead Insurance, Inc. would have been required to pay had there been no increase to the tax basis of the assets of Goosehead Financial, LLC as a result of the redemptions or exchanges and had Goosehead Insurance, Inc. not entered into the tax receivable agreement. Estimating the amount of payments that may be made under the tax receivable agreement is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. While the actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including the timing of redemptions or exchanges, the price of shares of our Class A common stock at the time of the redemption or exchange, the extent to which such redemptions or exchanges are taxable and the amount and timing of our income. See "Item 13. Certain relationships and related transactions, and director independence" of the Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We anticipate that we will account for the effects of these increases in tax basis and associated payments under the tax receivable agreement arising from future redemptions or exchanges as follows:

• we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the redemption or exchange;
• to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we will reduce the deferred tax asset with a valuation allowance; and
• we will record 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement and the remaining 15% of the estimated realizable tax benefit as an increase to additional paid-in capital.

All of the effects of changes in any of our estimates after the date of the redemption or exchange will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income.

Contractual obligations, commitments, and contingencies

The following table represents our contractual obligations as of March 31, 2026, aggregated by type (in thousands):

(1) The Company leases its facilities under non-cancelable operating leases. In addition to monthly lease payments, the lease agreements require the Company to reimburse the lessors for its portion of operating costs each year. Rent expense was $2.2 million and $2.1 million for the three months ended March 31, 2026 and 2025, respectively.

(2) The Company entered into a new credit agreement on January 8, 2025 for an aggregate $300 million in term loans, which were used to pay off the existing term loan, and a new revolving credit facility of $75 million, of which $26.0 million was drawn as of March 31, 2026. See "Note 8. Debt" under Part I, Item 1 of this Form 10-Q.

(3) Interest expense includes interest payments on our outstanding debt obligations under our credit agreement. Our debt obligations have variable interest rates. We have calculated future interest obligations based on the interest rate for our debt obligations as of March 31, 2026.

(4) See "Item 2. Management's discussion and analysis of financial condition and results of operation - Tax receivable agreement."

Share Repurchase Program

On April 24, 2024, our board of directors approved a share repurchase program with authorization to purchase up to $100 million of our Class A common stock, which expired on March 31, 2025. On April 23, 2025, our board of directors approved a new share repurchase program with authorization to purchase up to $100 million of our Class A common stock through May 1, 2026. On February 17, 2026, our board of directors extended the prior share repurchase program and increased the remaining authorization to purchase up to $198.3 million of our Class A common stock through May 1, 2027. See "Note 10. Stockholders' Equity" in the condensed consolidated financial statements included herein for a discussion of the repurchase programs.

Off-balance sheet arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any activities that expose us to any liability that is not reflected in our condensed consolidated financial statements except for those described under “Contractual obligations, commitments and contingencies” above.

Critical accounting policies

Our discussion and analysis of our consolidated financial condition and results of operations is based upon the accompanying condensed consolidated financial statements and notes thereto, which have been prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements requires us to make estimates, judgments and assumptions, which we believe to be reasonable, based on the information available. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Variances in the estimates or assumptions used to actual experience could yield materially different accounting results. On an ongoing basis, we evaluate the continued appropriateness of our accounting policies and resulting estimates to make adjustments we consider appropriate under the facts and circumstances. There have been no significant changes to our critical accounting policies as disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Recent accounting pronouncements

See "Note 2. Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements” under Part I, Item 1 of this Form 10-Q.

There have been no material changes to our exposure to market risks as described in "Item 7A. Quantitative and qualitative disclosure of market risks" in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2026. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes to our internal control over financial reporting that occurred during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.