What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-03 compared with 2024-02-22 · 254 added, 134 removed, 695 unchanged (36% of the section changed)

18 unchanged sentences

Stockholder's equity 89

Non-controlling interest 87

Noncontrolling interest 95

Equity-based compensation 96

22 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Commissions and Agency Fees and Franchise Revenues – Renewal and New Business Commissions and Renewal and New Business Royalty Fees — Refer to Notes 2 and 3 to the financial statements

Commissions and Agency Fees and Franchise Revenues – New and Renewal Commissions and New and Renewal Royalty Fees — Refer to Note 3 to the financial statements

Critical Audit Matter Description

4 unchanged sentences

For the year ended December 31, 2024, franchise revenue was $174.5 million, of which $138.9 million relates to renewal royalty fees and $27.1 million relates to new business royalty fees.

We identified renewal and new business commissions and renewal and new business royalty fees revenue as a critical audit matter because of the judgments necessary for management to estimate the variable consideration to be received for the current policy term.

This required extensive audit effort due to the volume of commissions

contracts and required a high degree of auditor judgment when performing audit procedures to audit management’s estimates of variable consideration and evaluating the results of those procedures.

We identified renewal and new business commissions and renewal and new business royalty fees revenue as a critical audit matter because of the judgments and assumptions necessary for management to estimate the variable consideration to be received for the current policy term.

This required a high degree of auditor judgment when

performing audit procedures to evaluate the reasonableness of management’s estimates of variable consideration and required extensive audit effort when performing those audit procedures due to the volume of commissions contracts.

How the Critical Audit Matter Was Addressed in the Audit

29 unchanged sentences

Other Income:

Other income — — 185

Interest expense ( 7,339 ) ( 6,568 ) ( 4,999 )

Other income (expense) ( 7,101 ) — —

Income before taxes 46,700 26,388 5,129

1 unchanged sentence

Net Income 49,113 23,696 2,630

net income attributable to non-controlling interests 9,556 2,065 2,893

net income attributable to noncontrolling interests 18,687 9,556 2,065

Net Income attributable to Goosehead Insurance, Inc.

43 unchanged sentences

Total stockholders' equity and members' deficit 43,889 27,966

Non-controlling interests ( 39,766 ) ( 44,294 )

Noncontrolling interests ( 4,813 ) ( 11,180 )

Total equity 39,076 16,786

4 unchanged sentences

(In thousands)

Issued shares of Class A common stock Issued shares of Class B common stock Class A Common stock Class B Common Stock Additional paid in capital Accumulated deficit Total stockholders' equity Non-controlling interest Total equity

Issued shares of Class A common stock Issued shares of Class B common stock Class A common stock Class B common stock Additional paid-in capital Accumulated deficit Total stockholders' equity Noncontrolling interest Total equity

Balance January 1, 2022 20,198 16,909 $ 200 $ 170 $ 34,736 $ ( 60,532 ) $ ( 25,426 ) $ ( 43,762 ) $ ( 69,188 )

Dividends declared — — — — — ( 31,657 ) ( 31,657 ) ( 28,343 ) ( 60,000 )

Net income — — — — — 565 565 2,065 2,630

3 unchanged sentences

Redemption of LLC Units 2,439 ( 2,439 ) 24 ( 24 ) ( 4,969 ) — ( 4,969 ) 4,969 —

Deferred tax adjustments related to Tax Receivable Agreement — — — — 8,758 — 8,758 279 9,037

Reallocation of Non-controlling interest — — — — — 197 197 ( 197 ) —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 7,162 — 7,162 — 7,162

Balance December 31, 2022 23,034 14,470 $ 228 $ 146 $ 51,038 $ ( 59,967 ) $ ( 8,555 ) $ ( 25,069 ) $ ( 33,624 )

Balance January 1, 2023 23,034 14,470 $ 228 $ 146 $ 51,038 $ ( 59,967 ) $ ( 8,555 ) $ ( 25,069 ) $ ( 33,624 )

Distributions — — — — — — — ( 10,939 ) ( 10,939 )

Net income — — — — — 14,140 14,140 9,556 23,696

3 unchanged sentences

Redemption of LLC Units 1,517 ( 1,517 ) 15 ( 15 ) ( 2,598 ) — ( 2,598 ) 2,598 —

Deferred tax adjustments related to Tax Receivable Agreement — — — — 6,415 — 6,415 747 7,162

Reallocation of Non-controlling interest — — — — — ( 464 ) ( 464 ) 464 —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 3,767 — 3,767 — 3,767

Balance December 31, 2023 24,966 12,954 $ 250 $ 130 $ 73,413 $ ( 45,827 ) $ 27,966 $ ( 11,180 ) $ 16,786

Balance January 1, 2024 24,966 12,954 $ 250 $ 130 $ 73,413 $ ( 45,827 ) $ 27,966 $ ( 11,180 ) $ 16,786

Distributions — — — — — — — ( 4,829 ) ( 4,829 )

Share repurchases ( 1,045 ) — ( 10 ) — ( 41,551 ) — ( 41,561 ) ( 22,044 ) ( 63,605 )

Net income — — — — — 30,426 30,426 18,687 49,113

3 unchanged sentences

Redemption of LLC Units 334 ( 334 ) 4 ( 4 ) ( 383 ) — ( 383 ) 507 124

Deferred tax adjustments related to Tax Receivable Agreement — — — — 3,159 — 3,159 608 3,767

Reallocation of Non-controlling interest — — — — — ( 626 ) ( 626 ) 626 —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 984 — 984 — 984

Balance December 31, 2024 24,668 12,620 $ 247 $ 126 $ 58,917 $ ( 15,401 ) $ 43,889 $ ( 4,813 ) $ 39,076

9 unchanged sentences

Depreciation and amortization 10,955 9,469 7,109

Loss on disposal of fixed assets 74 — —

Impairment expense 347 3,628 —

12 unchanged sentences

Contract liabilities ( 8,633 ) ( 19,454 ) ( 2,055 )

Premiums payable ( 75 ) ( 309 ) 629

Net cash provided by operating activities 71,544 50,833 36,033

Cash flows from investing activities:

Proceeds from notes receivable ( 130 ) 43 32

Issuance of notes receivable to franchisees ( 325 ) ( 130 ) —

Proceeds from notes receivable to franchisees 94 — 43

Purchase of software ( 11,209 ) ( 7,705 ) ( 2,484 )

3 unchanged sentences

Cash flows from financing activities:

Customer premiums, net 994 ( 75 ) ( 309 )

Debt issuance cost ( 621 ) — —

4 unchanged sentences

Proceeds from the issuance of Class A common stock 12,235 9,898 6,130

Repurchases of Class A common stock ( 63,184 ) — —

Member distributions ( 4,829 ) ( 10,939 ) —

Dividends to stockholders — — ( 60,000 )

Payments pursuant to tax receivable agreement ( 5,372 ) — —

Net cash used for financing activities ( 45,199 ) ( 17,991 ) ( 23,554 )

2 unchanged sentences

Cash and cash equivalents, and restricted cash, end of period $ 57,973 $ 44,047 $ 30,387

Year Ended December 31,

2024 2023 2022

Supplemental disclosure of cash flow data:

1 unchanged sentence

Cash paid for income taxes 631 701 484

Cash paid pursuant to TRA Agreement 421 — 1,921

See Notes to the Consolidated Financial Statements

9 unchanged sentences

(“TWIS”)—a Texas limited partnership headquartered in Westlake, TX and operating since 2003.

TWIS is a wholly-owned Goosehead Insurance Holdings ("GIH"), which is a wholly-owned subsidiary of GF.

TWIS is a wholly-owned subsidiary of Goosehead Insurance Holdings ("GIH"), which is a wholly-owned subsidiary of GF.

The Company had 14 corporate-owned offices in operation at December 31, 2024, 14 at December 31, 2023, and 12 at December 31, 2022.

20 unchanged sentences

GSHD is the sole managing member of GF and, although GSHD holds a minority economic interest in GF, GSHD 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 consolidated financial statements.

Accordingly, GSHD consolidates the financial results of GF and reports noncontrolling interest in GSHD's consolidated financial statements.

Basis of presentation and significant accounting policies

3 unchanged sentences

Reclassification

Certain amounts previously reported in the 2021 financial statements have been reclassified for comparative purposes to conform to the current period's presentation.

We reclassified amounts between "Employee compensation and benefits" and "General and administrative expenses" in the Consolidated Statement of Operations.

We reclassified amounts between "Receivables from franchisees, net" and "Accounts payable and accrued expenses" in the Consolidated Balance Sheet that also impacted balances in the Consolidated Statement of Cash Flows.

We disaggregated the proceeds and payments of the term notes payable and revolving credit facility on the Consolidated Statements of Cash Flows.

Certain amounts previously reported in the prior period financial statements have been reclassified for comparative purposes to conform to the current period's presentation.

The Company elected to change its presentation of cash flows associated with "Premiums payable" from operating activities to present them as financing activities, net, within the Consolidated Statement of Cash Flows within the caption "Customer premiums, net".

This reclassification had no impact on the Consolidated Statements of Operations, Consolidated Balance Sheets, or Consolidated Statements of Stockholders' Equity.

Significant accounting policies

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.

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 and 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.

3 unchanged sentences

The Company believes it is not exposed to any significant credit risk.

The Company currently holds no financial instruments that would be considered cash equivalents.

The Company earns interest on its cash balance that is held in interest-bearing checking accounts.

During the year ended December 31, 2024, the Company recognized $ 1.6 million in interest income within Other income (expense) in the Consolidated Statements of Operations.

No interest was earned during the years ended December 31, 2023 and 2022.

As of December 31, 2024, 2023 and 2022, the Company did not have any cash equivalents.

Restricted cash

7 unchanged sentences

Commissions and agency fees receivable

Upon issuance of a new policy, the Company typically collects the first premium payment from the insured and then remits the full premium amount to the insurance carriers.

The insurance carriers collect the remaining premiums directly from the insureds and remit the applicable commissions to the Company.

Upon issuance of a new policy, the Company typically collects the first premium payment from the insured and then remits the full premium amount to the insurance carrier.

The insurance carrier collects the remaining premiums

directly from the insured and remits the applicable commissions to the Company.

Accordingly, as reported in the accompanying consolidated balance sheets, commissions are receivables from the insurance carriers.

These direct-bill arrangements consist of a high volume of transactions with small premium amounts, with the billing controlled by the insurance carriers.

The income statement and balance sheet effects of the commissions are recorded at the

contract effective date and generally are based on a percentage of premiums for insurance coverage.

The income statement and balance sheet effects of the commissions are recorded at the contract effective date and generally are based on a percentage of premiums for insurance coverage.

During 2024, the Company wrote with over 200 insurance carriers, of which 54 provided national coverage.

In 2023, two carriers represented more than 10% of total revenue at 16 % and 12 %.

In 2024, three carriers represented more than 10% of total revenue at 19 %, 15 %, and 10 %.

In 2023, two carriers represented more than 10% of total revenue at 16 % and 12 %.

3 unchanged sentences

Allowance for uncollectible agency fees

The Company records agency fees receivable net of an allowance for estimated uncollectible accounts to reflect any loss anticipated for the related agency fees receivable balances and charge to bad debts.

The agency fees receivable balance consists of numerous small-balance, homogeneous accounts.

1 unchanged sentence

Receivable from franchisees

Receivable from franchisees consists of franchise fees receivable, net of allowance for uncollectible franchise fees and unamortized discount on franchise fees, royalty fees receivable, and notes receivable from franchisees.

Receivable from franchisees consists of franchise fees receivable net of an allowance for uncollectible franchise fees and unamortized discount on franchise fees;

royalty fees receivable;

and notes receivable from franchisees.

Franchise fees receivable

At the start date of the franc hise agreement, an entry to franchise fees receivable is recorded along with an entry for a contract liability, to be amortized to franchise fees within Franchise revenues over the 10-year life of the franchise contract.

At the start date of the franc hise agreement, the Company records an entry to establish a franchise fees receivable and a contract liability.

The contract liability will be amortized to franchise fees within Franchise revenues over the 10-year life of the franchise contract.

Franchis ees have the option to pay the full amount of franchise fees up front or to pay a deposit up front and the remaining balance by payment plan over time.

The franchisees that elect to pay the initial franchise fee over a term extending greater than one year pay in total an amount that exceeds the amount due had they paid the full amount up front.

The franchisees that elect to pay the initial franchise fee over time pay in total an amount that exceeds the amount due had they paid the full amount up front.

As such, the payment plan option is treated as a zero-interest rate note, which creates an imputation of interest.

2 unchanged sentences

Allowance for uncollectible franchise fees receivable

The Company records franchise fees receivable net of an allowance for estimated uncollectible accounts to reflect any loss anticipated related to the franchise fees receivable balances and charged to bad debts.

The franchise fees receivable balance consists of numerous small-balance, homogeneous accounts.

The Company calculates the allowance based on our history of write offs for all franchise accounts.

Franchise fees receivable and the related allowance is charged off to bad debts if the franchisee owing the balance terminates.

Franchise fees receivable and the related allowance is written off if the franchisee owing the balance terminates.

Royalty fees receivable

4 unchanged sentences

Goosehead provides personal and commercial property and casualty insurance brokerage services for its clients through a network of corporate-owned locations and franchise units.

Goosehead is compensated for the insurance brokerage services that it provides for clients in the form of commission revenue, agency fees, royalty fees, and contingent commissions.

Goosehead is compensated for the insurance brokerage services that it provides for clients in the form of commissions, agency fees, royalty fees, and contingent commissions.

The Company estimates revenue and constrains the estimates such that it is probable there will not be a significant reversal of revenue.

13 unchanged sentences

Intangible assets

Intangible assets are stated at cost less accumulated amortization and reflect amounts paid for the Company’s web domain, computer software costs, and books of business.

The web domain is amortized over a useful life of fifteen years , software costs are amortized over a useful life of three to ten years , and books of business (customer accounts) are amortized over a useful life of eight years .

Intangible assets are stated at cost less accumulated amortization and reflect amounts paid for the Company’s web domain, computer software costs, and books of business (customer accounts).

The web domain is amortized over a useful life of fifteen years , software costs are amortized over a useful life of three to ten years , and books of business are amortized over a useful life of eight years .

In May 2023, the Company entered into an agreement to purchase Vivint Smart Home's insurance book of business, for which the Company paid $ 5.8 million in cash consideration.

Total purchases of books of business during the year ended December 31, 2023 was $ 6.9 million.

No books of business were purchased during the year ended December 31, 2022.

We made no purchases of books of business during the year ended December 31, 2024.

Asset Impairment

1 unchanged sentence

In reviewing identifiable assets, if the undiscounted future cash flows were less than the carrying amount of the respective assets, an indicator of impairment would exist, and further analysis would be required to determine whether or not a loss would need to be charged against current period earnings as a component of general and administrative expenses.

Based on a review of intangible assets during the year ended December 31, 2023, the Company identified a group of internally-developed software assets that had not been placed into service and would not be completed.

As a result, the Company determined the assets had no fair value and recorded an impairment expense of $ 1.1 million related to the asset group.

Based on a review of tangible assets during the year ended December 31, 2024, the Company identified one office lease that would be subleased and completed a recoverability assessment for assets at that location.

Based on the results of the recoverability assessment, the Company determined that the undiscounted cash flows of the assets were below their carrying values.

As a result, the Company compared the fair values of the assets to their carrying values and recorded an impairment expense of $ 0.1 million for property and equipment and $ 0.2 million for right-of-use asset for the amount the carrying values exceeded the fair values.

The Company determined the fair values by estimating sublease cash flows based on market rates for similar properties and discounted them using the Company's internal borrowing rate.

Based on a review of tangible assets during the year ended December 31, 2023, the Company identified two office leases that will be subleased and completed a recoverability assessment for assets at those locations.

2 unchanged sentences

The Company determined the fair values by estimating sublease cash flows based on market rates for similar properties and discounted them using the Company's internal borrowing rate.

As a result, the Company determined the assets had no fair value and recorded an impairment expense of $ 1.1 million related to the asset group.

No additional impairment was identified during the year ended December 31, 2024, 2023, and 2022.

3 unchanged sentences

Deferred financing costs incurred in connection with the issuance of debt are capitalized and amortized to interest expense in accordance with the related debt agreements.

Deferred financing costs are included as a reduction in notes payable on the accompanying consolidated balance sheets.

Deferred financing costs for existing debt facilities are included as a reduction in notes payable on the accompanying consolidated balance sheets while deferred financing costs incurred for debt facilities not yet consummated as of the end of a reporting period are included in other assets on the accompanying consolidated balance sheets.

Lease Accounting

The primary leased asset class of the Company is real estate.

For leases with an original term longer than one year, lease liabilities are initially recognized on the lease commencement date based on the present value of the future minimum lease payments over the lease term, including non-lease components such as fixed common area maintenance costs and other fixed costs for generally all leases.

A corresponding right of use ("ROU") asset is initially recognized equal to the lease liability adjusted for any lease prepayments, initial direct costs and lease

incentives and amortized into rent expense, which is mapped to general and administrative expenses in the consolidated statements of operations.

A corresponding right-of-use ("ROU") asset is initially recognized equal to the lease liability adjusted for any lease prepayments, initial direct costs and lease incentives, and amortized into rent expense, which is included in general and administrative expenses in the consolidated statements of operations.

The discount rates used in determining the present value of leases represent our collateralized borrowing rate considering each lease's term.

The lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Certain leases have renewal options that can be exercised at the discretion of the Company.

Rent expense is generally recognized on a straight-line basis over the lease term and included in General and administrative expenses in the Consolidated Statement of Operations.

Certain leases have options to renew or terminate the lease that can be exercised at the discretion of the Company.

These options are included in the lease term when it is reasonably certain that we will exercise that option.

Rent expense is generally recognized on a straight-line basis over the lease term and included in General and administrative expenses in the Consolidated Statements of Operations.

See Note 15 for further information.

9 unchanged sentences

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 consolidated financial statements or related disclosures.

Reference Rate Reform (ASU 2020-04) :

In March 2020, the Financial Accounting Standards Board issued ASU 2020-04:

In March 2020, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No.

2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying U.S.

2 unchanged sentences

In December 2022, ASU 2022-06 extended the effective period through December 31, 2024.

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 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.

A substantial portion of our indebtedness bore interest at variable interest rates, primarily based on USD-LIBOR, and contained a provision to move to the Secured Overnight Financing Rate ("SOFR") if or when LIBOR is phased out.

On April 26, 2023, the Company entered into an Amendment No.1 to the Second Amended and Restated Credit Agreement executing the provision to move to SOFR from LIBOR.

Under the allowable expedients, a modification of a debt contract that is only a replacement of the reference rate is accounted for as a non-substantial modification.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments require enhanced disclosures of significant segment expenses and other segment items, provide for the disclosure of additional measures of a segment's profit or loss used by the chief operating decision maker, require that all annual disclosures about a reportable segment's profit or loss and assets be included in interim periods, and provide new segment reporting requirements for entities with a single reportable segment.

The Company adopted this ASU for the annual period ended December 31, 2024 and the amendments have been applied retrospectively to all periods presented.

Refer to our segment disclosure in "Note 16.

Segment information" for more information.

Accounting pronouncements not yet adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (Topic 740).

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

This standard requires the Company to provide further disaggregated income tax disclosures for specific categories on the effective tax rate reconciliation, as well as additional information about federal, state/local and foreign income taxes.

3 unchanged sentences

The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Suptopic 220-40):

Disaggregation of Income Statement Expenses .

The amendment requires additional disclosures of certain costs and expenses with the notes to the financial statements.

Additionally, in January 2025, the FASB issued ASU No.

2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Suptopic 220-40):

Clarifying the Effective Date , which clarified that the updates are effective for annual reporting periods beginning after December 15, 2026, and interim periods thereafter.

The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

Commissions and agency fees

19 unchanged sentences

In connection with Topic 606, contingent commissions are estimated with a constraint applied and accrued relative to the recognition of the corresponding commissions for the period over which the contract applies.

The resulting effect on the timing of recognizing contingent commissions closely follows a similar pattern as our commissions and fees with any adjustments recognized when payments are received or as additional information that affects the estimate becomes available.

As contingent commissions are earned in relation to policies placed by the Company with the insurance carrier, the timing of recognizing contingent commissions follows a similar pattern as our commissions and fees, with any adjustments recognized when payments are received or as additional information that affects the estimate becomes available.

Franchise revenues

6 unchanged sentences

Under the sales- and usage-based exception, the Company recognizes revenue over time as a franchise places and makes effective a policy for an insured.

The transaction price for the royalty fee for each policy made

effective is set as the contractual royalty rate multiplied by an estimate of the commissions to be received by the franchise for the current term of the policy.

The transaction price for the royalty fee for each policy made effective is set as the contractual royalty rate multiplied by an estimate of the commissions to be received by the franchise for the current term of the policy.

This estimate includes the fixed consideration due based on the contractual terms of the current policy and adjustments for estimates of modifications of the contractual terms of the current policy and/or termination of the policy before the end of the current term.

1 unchanged sentence

Contract Costs

Additionally, 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 Company defers certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans for selling new franchise agreements.

The Company has evaluated ASC Topic 340 - Other Assets and Deferred Cost (“ASC 340”), which requires companies to defer certain incremental costs to obtain customer contracts and certain costs to fulfill customer contracts.

Incremental costs to obtain - The Company defers certain costs to obtain customer contracts primarily as they relate to commission-based compensation plans for selling new franchise agreements.

These incremental costs are deferred and amortized over a 10-year period, which is consistent with the term of the contract.

The balance of cost to obtain is included with Other assets on the Consolidated balance sheets.

The balance of costs to obtain is included with Other assets on the Consolidated balance sheets.

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.

101 unchanged sentences

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 in order to obtain a more favorable interest rate on the outstanding debt.

The Company has the right, subject to approval by the administrative agent and each issuing bank, to increase the commitments under the credit facilities 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.

On April 26, 2023, the Company entered into Amendment No.1 of the Second Amended and Restated Credit Agreement, providing for the replacement of LIBOR with SOFR.

At December 31, 2023, the Company had not drawn against the revolver.

At December 31, 2023, the Company had a letter of credit of $ 0.2 million applied against the maximum borrowing availability, thus amounts available to draw totaled $ 49.8 million.

The revolving credit facility is collateralized by substantially all the Company’s assets, which includes rights to future commissions.

Interest payments on the revolving credit facility totaled $ 0.1 million, $ 0.7 million, and $ 0.4 million for the years ended December 31, 2023, 2022, and 2021, respectively.

The $ 100.0 million term note initially accrued interest at an interest rate of LIBOR plus 2.25 %, then at an interest rate determined by the Company's leverage ratio for the preceding period.

As of December 31, 2023, the Company was in the less than 1.50 x leverage ratio tranche, accruing interest of SOFR plus 1.75 %.

The aggregate principal amount of the term note as of December 31, 2023 is $ 77.5 million, payable in quarterly installments of $ 0.6 million for the first twelve months, $ 1.3 million for the next twelve months, $ 1.9 million for the next twelve months, and $ 2.5

million for the last twelve months, with a balloon payment of $ 65.6 million on June 21, 2026.

On May 31, 2023, the Company paid an additional $ 10.0 million toward the term note (with no prepayment penalty), reducing the final balloon payment to $ 55.6 million.

The term note is collateralized by substantially all the Company’s assets, which includes rights to future commissions.

The interest rate for each leverage ratio tier are as follows:

The revolving credit facility and term note are collateralized by substantially all the Company's assets, which includes right to future commissions and royalties.

On April 26, 2023, the Company entered into Amendment No.1 of the Second Amended and Restated Credit Agreement, which provided that LIBOR should be replaced with Term SOFR.

On April 24, 2024, the Company entered into Amendment No.

2 of the Second Amended and Restated Credit Agreement, increasing the term note payable by $ 25 million and increasing the capacity of the revolving credit facility by $ 25 million to a total capacity of $ 75 million.

At December 31, 2024, the Company had nothing drawn against the revolving credit facility and had a letter of credit of $ 0.2 million applied against the maximum borrowing availability.

Thus, amounts available to draw totaled $ 74.8 million.

The revolving credit facility is due in full on July 21, 2026.

The aggregate principal amount of the term note as of December 31, 2024 is $ 93.1 million, payable in quarterly installments of $ 2.5 million, with a balloon payment of $ 80.5 million on July 21, 2026.

Amounts outstanding under both the term note and the revolving credit facility bear interest at Term SOFR plus a margin based on our current leverage ratio.

The interest rates applicable for each leverage ratio tier are as follows:

Leverage Ratio Interest Rate

3 unchanged sentences

SOFR + 250 bps

At December 31, 2024, the interest rate applicable for the credit facilities was Term SOFR plus 175 basis points.

Interest payments on the revolving credit facility totaled $ 0.2 million, $ 0.1 million, and $ 0.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Loan origination fees of $ 0.8 million at December 31, 2024 are reflected as a reduction to the note balance and are amortized through interest expense.

The effective interest rate for the term note as of December 31, 2024 was 7.76 %.

Maturities of the term note payable for the next five calendar years as of December 31, 2024 are as follows (in thousands) :

2025 $ 10,063

Total $ 93,079

There is nothing drawn against the revolver which is coterminous with the term loan and is due in full on June 21, 2026.

Loan origination fees of $ 0.6 million at December 31, 2023 are reflected as a reduction to the note balance and are amortized through interest expense.

The Company’s note payable agreement contains certain restrictions and covenants.

3 unchanged sentences

As of December 31, 2024, the Company was in compliance with these covenants.

Because of both instruments’ origination date and variable interest rate, the note payable balance at December 31, 2023 and December 31, 2022, approximates fair value using Level 2 inputs, described below.

Because of both instruments’ variable interest rate, the note payable balances at December 31, 2024 and December 31, 2023 approximate their fair values 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.

6 unchanged sentences

The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Subsequent event

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 replaces the existing Second Amended and Restated Credit Agreement, dated July 21, 2021, which was repaid with the proceeds of the 2025 Initial Term Loan and terminated.

Loans under the 2025 Credit Agreement will bear interest at a rate of Term SOFR plus 3.50 %.

The 2025 Credit Agreement is secured by all property owned, leased or operated by the Company except for certain excluded assets.

As a result of the Reorganization Transactions and the Offering, GSHD became the sole managing member of GF, which is treated as a partnership for U.S.

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Non-deductible excess compensation — 70 15

Non-deductible employee moving expenses — — 6

Meals & entertainment 178 152 101

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GSHD has deferred tax assets resulting from tax basis adjustments to the assets of GF arising from redemptions of LLC Units and corresponding exchanges of Class B common stock for shares of Class A common stock.

These tax basis adjustments have reduced the amount of tax we are required to pay, and are expected to reduce the amount of tax that GSHD would otherwise be required to pay in the future.

These tax basis adjustments have reduced the amount of tax we are required to pay, and they are expected to reduce the amount of tax that GSHD would otherwise be required to pay in the future.

See tax receivable agreement subsection below for additional details.

GSHD also has income tax net operating loss carryforwards for federal and state purposes of $ 83.4 million and $ 12.4 million (post apportionment pre-tax), respectively.

The federal net operating loss carryforwards are carried forward indefinitely and the state net operating loss carryforwards begin to expire in 2040.

The federal net operating loss carryforwards are carried forward indefinitely and are limited to 80% of taxable income in a given year.

The state net operating loss carryforwards begin to expire in 2033.

Uncertain tax positions

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These tax basis adjustments have reduced the amount of tax we are required to pay, and 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 ("TRA") 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 TRA.

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 years ended December 31, 2024, 2023 and 2022, an aggregate of 0.3 million, 1.5 million and 2.4 million LLC Units, respectively, were redeemed by the Pre-IPO LLC Members for newly-issued shares of Class A common stock.

In connection with these redemptions, we received 0.3 million, 1.5 million and 2.4 million LLC Units, which resulted in an increase in the tax basis of our investment in GF subject to the provisions of the TRA.

We recognized a liability for the TRA Payments due to the Pre-IPO LLC Members, representing 85 % of the aggregate tax benefits we expect 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 our estimates of future taxable income.

As of December 31, 2023 and 2022, the total amount of TRA Payments due to the Pre-IPO LLC Members under the TRA was $ 149.3 million and $ 125.7 million, respectively, of which $ 0.0 million and $ 0.0 million , respectively, was current and included in Accounts payables and accrued expenses on the Consolidated balance sheets.

We recognized a liability for the tax receivable agreement payments due to the Pre-IPO LLC Members, representing 85 % of the aggregate tax benefits we expect to realize from the tax basis increases related to the redemptions of LLC Units, after concluding it was probable that such tax receivable agreement payments would be paid based on our estimates of future taxable income.

As of December 31, 2024 and 2023, the total amount of payments due to the Pre-IPO LLC Members under the tax receivable agreement was $ 160.1 million and $ 149.3 million, respectively, of which $ 0.0 million and $ 0.0 million, respectively, was current and included in Accounts payables and accrued expenses on the Consolidated balance sheets.

Stockholder's equity

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Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to GSHD's stockholders for their vote or approval, except as otherwise required by applicable law, by agreement, or by GSHD's certificate of incorporation.

Correction of Prior Period Balances

Subsequent to the issuance of the Company’s Annual report on Form 10-K for the year ended December 31, 2023, the Company determined that it did not properly apply the guidance under ASC 810-10-45-23 in determining the allocation of activity related to the exercise of stock options, equity-based compensation, activity under employee stock purchase plan, and redemption of LLC Units.

The Company also identified an error in the recording of deferred tax adjustments related to Tax Receivable Agreement.

The net impact of these misstatements was an overstatement of additional paid-in capital, an understatement of accumulated deficit, and an understatement of noncontrolling interest as presented in the consolidated statements of stockholders’ equity and consolidated balance sheets for all periods presented.

As a result, the Company restated the prior period financial statements to correct the errors.

Additionally, the Company has changed the consolidated statement of stockholders' equity presentation to reflect the reallocation of noncontrolling interest within the specific line items resulting in reallocation instead of as a separate line item.

The Company will also correct previously issued quarterly financial statements for such misstatements in future filings, as applicable.

The Company evaluated the materiality of these misstatements from quantitative and qualitative perspectives and concluded the misstatements are not material to the prior periods.

The amounts previously reported within the Company’s financial statements have been revised to reflect the corrected balances as presented below (in thousands):

Consolidated balance sheet

(in thousands)

As of December 31, 2023

As previously reported Adjustment As corrected

Additional paid-in capital 103,228 ( 29,815 ) 73,413

Accumulated deficit ( 47,056 ) 1,229 ( 45,827 )

Total stockholders's equity 56,552 ( 28,586 ) 27,966

Noncontrolling interest ( 39,766 ) 28,586 ( 11,180 )

Consolidated statements of stockholders' equity

(in thousands)

As Previously Reported

Balance January 1, 2022 20,198 16,909 $ 200 $ 170 $ 46,281 $ ( 60,671 ) $ ( 14,020 ) $ ( 55,168 ) $ ( 69,188 )

Net income — — — — — 565 565 2,065 2,630

Exercise of stock options 381 — 4 — 5,427 — 5,431 — 5,431

Equity-based compensation — — — — 19,642 — 19,642 — 19,642

Activity under employee stock purchase plan 16 — — — 699 — 699 — 699

Redemption of LLC Units 2,439 ( 2,439 ) 24 ( 24 ) ( 7,598 ) — ( 7,598 ) 7,598 —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 6,415 — 6,415 747 7,162

Reallocation of Noncontrolling interest — — — — — ( 464 ) ( 464 ) 464 —

Balance December 31, 2022 23,034 14,470 $ 228 $ 146 $ 70,866 $ ( 60,570 ) $ 10,670 $ ( 44,294 ) $ ( 33,624 )

Balance January 1, 2022 — — $ — $ — $ ( 11,545 ) $ 139 $ ( 11,406 ) $ 11,406 $ —

Net income — — — — — — — — —

Exercise of stock options — — — — ( 2,699 ) — ( 2,699 ) 2,699 —

Equity-based compensation — — — — ( 8,643 ) — ( 8,643 ) 8,643 —

Activity under employee stock purchase plan — — — — ( 317 ) — ( 317 ) 317 —

Redemption of LLC Units — — — — 2,630 — 2,630 ( 2,630 ) —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 747 — 747 ( 747 ) —

Reallocation of Noncontrolling interest — — — — — 464 464 ( 464 ) —

Balance December 31, 2022 — — $ — $ — $ ( 19,828 ) $ 603 $ ( 19,225 ) $ 19,225 $ —

Balance January 1, 2022 20,198 16,909 $ 200 $ 170 $ 34,736 $ ( 60,532 ) $ ( 25,426 ) $ ( 43,762 ) $ ( 69,188 )

Net income — — — — — 565 565 2,065 2,630

Exercise of stock options 381 — 4 — 2,728 — 2,732 2,699 5,431

Equity-based compensation — — — — 10,999 — 10,999 8,643 19,642

Activity under employee stock purchase plan 16 — — — 382 — 382 317 699

Redemption of LLC Units 2,439 ( 2,439 ) 24 ( 24 ) ( 4,969 ) — ( 4,969 ) 4,969 —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 7,162 — 7,162 — 7,162

Reallocation of Noncontrolling interest — — — — — — — — —

Balance December 31, 2022 23,034 14,470 $ 228 $ 146 $ 51,038 $ ( 59,967 ) $ ( 8,555 ) $ ( 25,069 ) $ ( 33,624 )

As Previously Reported

Balance January 1, 2023 23,034 14,470 $ 228 $ 146 $ 70,866 $ ( 60,570 ) $ 10,670 $ ( 44,294 ) $ ( 33,624 )

Distributions — — — — — — — ( 10,939 ) ( 10,939 )

Net income — — — — — 14,140 14,140 9,556 23,696

Exercise of stock options 409 — 4 — 9,286 — 9,290 — 9,290

Equity-based compensation — — — — 23,989 — 23,989 — 23,989

Activity under employee stock purchase plan 6 — 1 — 605 — 607 — 607

Redemption of LLC Units 1,517 ( 1,517 ) 15 ( 15 ) ( 4,677 ) — ( 4,677 ) 4,677 —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 3,159 — 3,159 608 3,767

Reallocation of Noncontrolling interest — — — — — ( 626 ) ( 626 ) 626 —

Balance December 31, 2023 24,966 12,954 $ 250 $ 130 $ 103,228 $ ( 47,056 ) $ 56,552 $ ( 39,766 ) $ 16,786

Balance January 1, 2023 — — $ — $ — $ ( 19,828 ) $ 603 $ ( 19,225 ) $ 19,225 $ —

Distributions — — — — — — — — —

Net income — — — — — — — — —

Exercise of stock options — — — — ( 3,662 ) — ( 3,662 ) 3,662 —

Equity-based compensation — — — — ( 8,788 ) — ( 8,788 ) 8,788 —

Activity under employee stock purchase plan — — — — ( 224 ) — ( 224 ) 224 —

Redemption of LLC Units — — — — 2,078 — 2,078 ( 2,078 ) —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 608 — 608 ( 608 ) —

Reallocation of Noncontrolling interest — — — — — 626 626 ( 626 ) —

Balance December 31, 2023 — — $ — $ — $ ( 29,815 ) $ 1,229 $ ( 28,586 ) $ 28,586 $ —

Balance January 1, 2023 23,034 14,470 $ 228 $ 146 $ 51,038 $ ( 59,967 ) $ ( 8,555 ) $ ( 25,069 ) $ ( 33,624 )

Distributions — — — — — — — ( 10,939 ) ( 10,939 )

Net income — — — — — 14,140 14,140 9,556 23,696

Exercise of stock options 409 — 4 — 5,624 — 5,628 3,662 9,290

Equity-based compensation — — — — 15,201 — 15,201 8,788 23,989

Activity under employee stock purchase plan 6 — 1 — 381 — 383 224 607

Redemption of LLC Units 1,517 ( 1,517 ) 15 ( 15 ) ( 2,598 ) — ( 2,598 ) 2,598 —

Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 3,767 — 3,767 — 3,767

Reallocation of Noncontrolling interest — — — — — — — — —

Balance December 31, 2023 24,966 12,954 $ 250 $ 130 $ 73,413 $ ( 45,827 ) $ 27,966 $ ( 11,180 ) $ 16,786

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 year ended December 31, 2023, 2022, and 2021, divided by the basic weighted average number of Class A common stock as of December 31, 2023 and 2022 (in thousands, except per share amounts ).

The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the years ended December 31, 2024, 2023, and 2022, divided by the basic weighted average number of Class A common stock as of December 31, 2024, 2023, and 2022 (in thousands, except per share amounts ).

Diluted EPS 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.

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$ 30,426 $ 14,140 $ 565

net income attributable to non-controlling interests (1)

income tax effect on income attributable to non-controlling interests assuming conversion of Class B common shares (1)

net income attributable to noncontrolling interests (1)

18,687 9,556 —

income tax effect on income attributable to noncontrolling interests assuming conversion of Class B common shares (1)

( 4,767 ) ( 2,524 ) —

Net income available to GSHD - Diluted

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Weighted average outstanding Class B common shares (if-converted) (1)

Stock options (2)

12,749 13,769 —

Stock options (2)

Weighted average outstanding Class A common shares - Diluted 38,301 38,356 21,773

Earnings per share of Class A common stock - Diluted $ 1.16 $ 0.55 $ 0.03

(1) For the year ended December 31, 2023, the impact of the conversion of Class B common shares to Class A common shares calculated under the if-converted method was dilutive, and as such, (a) 13,769 common shares (assuming the conversion of all outstanding class B common stock) were included in the Weighted average outstanding Class A common shares - Diluted and (b) $ 7.0 million of non-controlling interest net income (after incremental tax effect from assuming conversion of all outstanding class B common stock), was added back to Net income available to GSHD - Diluted.

For the years 2022 and 2021, the impact of the conversion of Class B common shares to Class A common shares is excluded from the calculation of Diluted EPS because inclusion of such shares would be anti-dilutive.

(2) Dilutive stock options is computed using the treasury stock method, which are not participating securities

Non-controlling interest

Non-Controlling Interests

(1) For the years ended December 31, 2024 and 2023, the impact of the conversion of Class B common shares to Class A common shares calculated under the if-converted method was dilutive, and as such, (a) 12,749 thousand and 13,769 thousand common shares (assuming the conversion of all outstanding class B common stock) were included in the Weighted average outstanding Class A common shares - Diluted and (b) $ 13.9 million and $ 7.0 million of noncontrolling interest net income (after incremental tax effect from assuming conversion of all outstanding class B common stock), was added back to Net income available to GSHD - Diluted.

For the year 2022, the impact of the conversion of Class B common shares to Class A common shares is excluded from the calculation of Diluted EPS because inclusion of such shares would be anti-dilutive.

(2) The dilutive effect of stock options is computed using the treasury stock method.

869 thousand, 1,560 thousand, and 2,390 thousand stock options were excluded from the computation of diluted earnings per share of Class A common stock for the years ended December 31, 2024, 2023 and 2022 because the effect would have been anti-dilutive.

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 through March 31, 2025.

The share repurchase program does not require the Company to acquire any dollar amount or number of shares of common stock and may be modified, suspended, or discontinued at any time.

The timing, manner, price and amount of any repurchases will be determined at the discretion of management in accordance with applicable securities laws and other restrictions.

Class A common

stock acquired under the program will be retired upon repurchase.

Additionally, for every repurchased share of Class A common stock, the Company will direct GF to repurchase, at the price paid to repurchase such share, and cancel an LLC unit of GF held by the Company.

During the year ended December 31, 2024, the Company repurchased and retired 1,045 thousand shares of Class A common stock for an aggregate $ 63.2 million.

All repurchases were made in open-market transactions and recorded at their aggregate transaction cost inclusive of commissions and excise taxes.

As of December 31, 2024, the Company had remaining authorization under the share repurchase program to repurchase up to $ 36.8 million of the Company's Class A common stock.

Noncontrolling interest

Following the Offering, GSHD became 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.

GSHD reports a noncontrolling interest representing the economic interest in GF held by the other members of GF.

GF makes distributions to the LLC Unit holders on a pro rata basis to facilitate the LLC Unit holder's quarterly tax payments.

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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 2023 and 2022, an aggregate of 1.5 million and 2.4 million LLC Units, respectively, were redeemed by the non-controlling interest holders.

During 2024 and 2023, an aggregate of 0.3 million and 1.5 million LLC Units, respectively, were redeemed by the noncontrolling interest holders.

Pursuant to the GF LLC Agreement, we issued 0.3 million and 1.5 million shares of Class A common stock in connection with these redemptions and received 0.3 million and 1.5 million LLC Interests, increasing our ownership interest in GF.

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Number of LLC Units held by GSHD 24,668 66.2 % 24,966 65.8 %

Number of LLC Units held by non-controlling interest holders 12,954 34.2 % 14,471 38.6 %

Number of LLC Units held by noncontrolling interest holders 12,620 33.8 % 12,954 34.2 %

Number of LLC Units outstanding 37,288 100.0 % 37,920 100.0 %

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 years ended December 31, 2023 and 2022 was 36.5 % and 43.6 %, respectively.

All net income prior to the Offering is attributed to non-controlling interest holders.

The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to GSHD and the noncontrolling interest holders.

The noncontrolling interest holders' weighted average ownership percentage for the years ended December 31, 2024 and 2023 was 34.1 % and 36.5 %, respectively.

Equity-based compensation

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3.44 %- 4.06 %

1.19 % - 4.26 %

A summary of stock option activity for the year ended December 31, 2024 is as follows ( in thousands except per-share amounts ):

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Cash received from stock option exercises during the year ended December 31, 2024 was $ 12.2 million.

On July 28, 2021 GF approved an extraordinary dividend in the aggregate amount of $ 60 million payable to holders of LLC Units, including GSHD.

The board of directors of the Company subsequently declared an extraordinary dividend of $ 1.63 (rounded) to all holders of Class A common stock of GSHD with a record date of August 9, 2021, which was paid on August 23, 2021.

A summary of the total amounts declared and paid by GF is as follows (in thousands):

LLC Units held as of August 9, 2021 Dividend Paid

Class A common stockholders 19,429 $ 31,657

Class B common stockholders via LLC Units held 17,401 28,343

Total 36,830 $ 60,000

Any future extraordinary dividends will be declared at the sole discretion of GF's managing members, with respect to GF, and the Company's board of directors, with respect to GSHD.

In determining whether a future extraordinary dividend will be declared by the Company, the board of directors may, at its sole discretion, consider the following:

the Company's financial condition and operating results, the Company's available cash and current and anticipated cash needs, the Company's capital requirements, any contractual, legal, tax and regulatory restrictions, general economic and business conditions, and such other factors or conditions as the board of directors deems relevant.

The Company did not approve or pay any dividends during the years ended December 31, 2024 and 2023.

On January 9, 2025, GF declared a special distribution of $ 175 million, which was paid in cash on January 31, 2025 to holders of record of LLC Units, including to GSHD, as of the close of business on January 21, 2025.

The special distribution resulted in a payment of $ 59 million to our noncontrolling interest holders.

On January 9, 2025, the board of directors of the Company declared a one-time special cash dividend of $ 5.91 to all holders of Class A common stock of GSHD as of the close of business on January 21, 2025, which was paid in cash on January 31, 2025 for a total of $ 146 million.

$ 1.22 of the special cash dividend was funded by cash received by GSHD from prior tax distributions from GF that are in excess of the corporate income taxes payable by GSHD.

The remaining $ 4.69 of the special dividend was funded by the cash received by the Company from the special distribution by GF.

Any future special dividends will be declared at the sole discretion of GF's managing members, with respect to GF, and the Company's board of directors, with respect to GSHD.

In determining whether a future special dividend will be declared by the Company, the board of directors may, at its sole discretion, consider the following:

At December 31, 2024, Goosehead was obligated under a number of operating leases, exclusively leases for premises and equipment used for business purposes.

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None of these lease agreements impose restrictions on the Company’s ability to pay dividends, engage in debt or equity financing transactions or enter into further lease agreements.

Certain of these leases contain escalation clauses that will increase rent payments based on maintenance, utility and tax increases, which are non-lease components and

variable in nature.

The Company elected not to separate lease and non-lease components of a contract for its real estate and equipment leases.

As such, real estate lease payments represent payments on both lease and non-lease components.

Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term.

Certain of these leases contain escalation clauses that will increase rent payments based on maintenance, utility and tax increases, which are non-lease components and variable in nature.

The Company elected not to separate lease and non-lease components of a contract for its real

estate and equipment leases.

As such, real estate and equipment lease payments represent payments on both lease and non-lease components.

Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the fixed future minimum lease payments over the lease term.

The future lease payments are discounted at a rate that represents the Company’s collateralized borrowing rate for financing instruments of a similar term.

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The ROU asset also includes any lease prepayments made, plus initial direct costs incurred, less any lease incentives received.

Rent expense associated with operating leases is recognized on a straight-line basis over the lease term, and generally included in occupancy expense within General and administrative expenses in the Consolidated statements of operations.

Rent expense associated with operating leases is recognized on a straight-line basis over the lease term and included in occupancy expense within General and administrative expenses in the Consolidated statements of operations.

The following table provides information related to the Company’s leases as of December 31, 2024 and 2023 (in thousands) :

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The following is a schedule of future maturity of lease liability as of December 31, 2024 (in thousands):

2024 $ 11,292

Total lease payments 74,246

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Segment information

The 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 consolidated financial statements.

The Company is organized into a single reportable segment:

insurance distribution.

The personal lines insurance distribution segment provides clients with access to home, auto, umbrella, motorcycle, flood, and other ancillary insurance products.

The Company derives its revenue entirely from within the United States and manages business activities on a consolidated basis.

The Company’s chief operating decision maker is its Chief Executive Officer.

The accounting policies of the insurance distribution segment are the same as those described in the summary of significant accounting policies.

The chief operating decision maker uses net income, as reported on the Consolidated Statements of Operations, to assess performance and allocate resources for the insurance distribution segment.

The significant segment expense categories regularly provided to the chief operating decision maker are the same as those included on the Consolidated Statements of Operations.

The measure of segment assets is total assets as reported on the Consolidated Balance Sheets.

The chief operating decision maker uses net income to assess performance by examining period-over-period trends, benchmarking to the Company's competitors, and monitoring budget versus actual results.

The chief operating decision maker uses net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the segment or into other parts of the entity, such as for share repurchases or dividends.

From time to time, GSHD may be involved in various legal proceedings, lawsuits and claims incidental to the conduct of the Company's business.

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On August 8, 2023, the parties entered into a proposed settlement providing for certain non-monetary benefits to the class (i.e., revisions to the Company's Stockholder Agreement).

A hearing is set for February 22, 2024 to, among other things, consider whether to grant final approval of the proposed settlement.

Additionally, the plaintiff has petitioned the Court for attorneys’ fees and litigation expenses.

Additionally, the plaintiffs have petitioned the Court for attorneys' fees and litigation expenses.

The matter is currently stayed.

While there can be no assurance regarding the ultimate outcome of the petition, the Company believes a potential loss, if any, would not be material.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data