Goosehead Insurance, Inc. 10-K

Item 8. Financial statements and supplementary data Index to consolidated financial statements Page Goosehead Insurance, Inc. Annual consolidated financial statements Report of Independent Registered Public Accounting Firm ( Deloitte & Touche LLP , Dallas, Texas , PCAOB ID No. 34 ) 72 Consolidated statements of operations for each of the three years in the period ended December 31, 2025. 74 Consolidated balance sheets as of December 31, 2025 and December 31, 2024 75 Consolidated statements of stockholders' equity for each of the three years in the period ended December 31, 2025. 76 Consolidated statements of cash flows for each of the three years in the period ended December 31, 2025. 78 Notes to the consolidated financial statements 80 1. Organization 80 2. Summary of significant accounting policies 81 3. Revenues 85 4. Franchise fees receivable 88 5. Allowance for uncollectible agency fees 88 6. Property and equipment 89 7. Intangible assets 89 8. Employee benefit obligation 89 9. Debt 90 10. Income taxes 91 11. Stockholder's equity 93 12. Noncontrolling interest 95 13. Equity-based compensation 96 14. Dividends 97 15. Leases 98 16. Segment information 100 17. Litigation 100 18. Related Party Transactions 100 71 Report of Independent Registered Public Accounting Firm To the stockholders and the Board of Directors of Goosehead Insurance, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Goosehead Insurance, Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 19, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. 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 – New and Renewal Commissions and New and Renewal Royalty Fees — Refer to Note 3 to the financial statements Critical Audit Matter Description 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. The transaction price for commissions and royalty fees revenue is set as an estimate of the variable consideration to be received for the current policy term. This estimate includes fixed consideration due based on the contractual terms of the current policy, 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, and constraint of the variable consideration to the extent that it is probable there will not be a significant reversal of revenue. We identified commissions revenue, consisting of renewal and new business commissions, and royalty fees revenue, consisting of renewal and new business royalty fees, 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. 72 How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s estimates of the variable consideration in recognizing revenue for renewal and new business commissions and renewal and new business royalty fees revenue included the following, among others: • For a sample of commissions and royalty fees revenue transactions, we tested the recording of cash receipts by agreeing the amounts recognized to source documents. • We developed an independent expectation of the variable consideration estimates for commissions and royalty fees revenue based on historical policy and commissions data. • We evaluated management's variable consideration estimates for commissions and royalty fees revenue made at year end by performing the following: ◦ Tested the mathematical accuracy of management’s calculation of the variable consideration estimates. ◦ Tested the accuracy and completeness of underlying data, including historical policy and commissions data, used in management’s calculation of the variable consideration estimates. • We performed retrospective reviews of management’s variable consideration estimates to identify potential bias in the determination of commissions and royalty fees revenue. • We evaluated whether publicly available information contradicted management’s assumptions. /s/ Deloitte & Touche LLP Dallas, Texas February 19, 2026 We have served as the Company's auditor since 2017. 73 Goosehead Insurance, Inc. Consolidated statements of operations (In thousands, except per share amounts) Year Ended December 31, 2025 2024 2023 Revenues: Commissions and agency fees $ 155,386 $ 139,059 $ 116,061 Franchise revenues 209,248 174,514 143,772 Interest income 670 932 1,443 Total revenues 365,304 314,505 261,276 Operating Expenses: Employee compensation and benefits 196,364 172,942 152,604 General and administrative expenses 81,379 67,069 62,111 Bad debts 1,842 2,901 4,361 Depreciation and amortization 11,270 10,453 9,244 Total operating expenses 290,855 253,365 228,320 Income from operations 74,449 61,140 32,956 Other Income: Interest expense ( 23,793 ) ( 7,339 ) ( 6,568 ) Other income (expense) 192 ( 7,101 ) — Income before taxes 50,848 46,700 26,388 Tax expense (benefit) 6,397 ( 2,413 ) 2,692 Net Income 44,451 49,113 23,696 Less: net income attributable to noncontrolling interests 16,620 18,687 9,556 Net Income attributable to Goosehead Insurance, Inc. $ 27,831 $ 30,426 $ 14,140 Earnings per share: Basic $ 1.11 $ 1.23 $ 0.59 Diluted $ 1.04 $ 1.16 $ 0.55 Weighted average shares of Class A common stock outstanding: Basic 24,975 24,657 23,929 Diluted 38,103 38,301 38,356 See Notes to the Consolidated Financial Statements 74 Goosehead Insurance, Inc. Consolidated balance sheets (In thousands, except par value amounts) December 31, 2025 2024 Assets Current Assets: Cash and cash equivalents $ 34,390 $ 54,280 Restricted cash 3,547 3,693 Commissions and agency fees receivable, net 36,613 31,375 Receivable from franchisees, net 11,141 11,077 Prepaid expenses 7,552 8,139 Total current assets 93,243 108,564 Receivable from franchisees, net of current portion 2,936 3,469 Property and equipment, net of accumulated depreciation 21,549 24,101 Right-of-use asset 34,087 37,420 Intangible assets, net of accumulated amortization 39,700 25,075 Deferred income taxes, net 216,371 193,478 Other assets 6,978 5,546 Total assets $ 414,864 $ 397,653 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable and accrued expenses $ 33,629 $ 22,891 Premiums payable 3,547 3,693 Lease liability 8,666 6,535 Contract liabilities 3,241 3,275 Note payable 2,993 10,063 Liabilities under tax receivable agreement 6,237 — Total current liabilities 58,313 46,457 Lease liability, net of current portion 51,168 54,536 Note payable, net of current portion 289,461 82,251 Contract liabilities, net of current portion 13,025 15,191 Liabilities under tax receivable agreement, net of current portion 165,685 160,142 Total liabilities 577,652 358,577 Commitments and contingencies (see notes 9, 15, and 17) Class A common stock, $ 0.01 par value per share 300,000 shares authorized, 24,653 shares issued and outstanding as of December 31, 2025, 24,668 issued and outstanding as of December 31, 2024 247 247 Class B common stock, $ 0.01 par value per share - 50,000 shares authorized, 11,935 issued and outstanding as of December 31, 2025, 12,620 issued and outstanding as of December 31, 2024 119 126 Additional paid-in capital 37,486 58,917 Accumulated deficit ( 133,356 ) ( 15,401 ) Total stockholders' equity ( 95,504 ) 43,889 Noncontrolling interests ( 67,284 ) ( 4,813 ) Total equity ( 162,788 ) 39,076 Total liabilities and equity $ 414,864 $ 397,653 See Notes to the Consolidated Financial Statements 75 Goosehead Insurance, Inc. Consolidated statements of stockholders’ equity (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 Noncontrolling interest Total equity 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 Balance December 31, 2023 24,966 12,954 $ 250 $ 130 $ 73,413 $ ( 45,827 ) $ 27,966 $ ( 11,180 ) $ 16,786 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, 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 Exercise of stock options 403 — 3 — 7,695 — 7,698 4,345 12,043 Equity-based compensation — — — — 18,438 — 18,438 9,533 27,971 Activity under employee stock purchase plan 10 — — — 321 — 321 168 489 Redemption of LLC Units 334 ( 334 ) 4 ( 4 ) ( 383 ) — ( 383 ) 507 124 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 76 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, 2025 24,668 12,620 $ 247 $ 126 $ 58,917 $ ( 15,401 ) $ 43,889 $ ( 4,813 ) $ 39,076 Distributions — — — — — — — ( 66,931 ) ( 66,931 ) Dividends declared ($ 5.91 per share) — — — — — ( 145,786 ) ( 145,786 ) — ( 145,786 ) Share repurchases ( 1,014 ) — ( 10 ) — ( 53,302 ) — ( 53,312 ) ( 28,408 ) ( 81,720 ) Net income — — — — — 27,831 27,831 16,620 44,451 Exercise of stock options 309 — 3 — 8,779 — 8,782 4,771 13,553 Equity-based compensation — — — — 15,688 — 15,688 7,687 23,375 Activity under employee stock purchase plan 5 — — — 270 — 270 143 413 Redemption of LLC Units 685 ( 685 ) 7 ( 7 ) ( 3,647 ) — ( 3,647 ) 3,647 — Deferred tax adjustments net of Tax Receivable Agreement liabilities — — — — 10,781 — 10,781 — 10,781 Balance December 31, 2025 24,653 11,935 $ 247 $ 119 $ 37,486 $ ( 133,356 ) $ ( 95,504 ) $ ( 67,284 ) $ ( 162,788 ) See Notes to the Consolidated Financial Statements 77 Goosehead Insurance, Inc. Consolidated statements of cash flows (In thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 44,451 $ 49,113 $ 23,696 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,270 10,535 9,244 Amortization of debt discounts and issuance costs 1,142 420 225 (Gain) loss on disposal of fixed assets ( 189 ) 74 — Loss on debt extinguishment 804 — — Impairment expense 4,694 347 3,628 Bad debt expense 1,842 2,901 4,361 Equity-based compensation 23,375 27,971 23,989 Adjustments to tax receivable agreement liability 516 8,672 23,640 Deferred income taxes 5,888 ( 3,745 ) ( 22,123 ) Noncash lease expense ( 1,723 ) ( 4,476 ) ( 748 ) Cloud computing arrangement implementation costs ( 657 ) ( 1,180 ) ( 85 ) Changes in operating assets and liabilities: Receivable from franchisees 104 3,858 7,666 Commissions and agency fees receivable ( 6,027 ) ( 19,950 ) ( 28 ) Prepaid expenses 588 ( 250 ) ( 3,555 ) Other assets 966 827 486 Accounts payable and accrued expenses 6,913 5,060 ( 109 ) Contract liabilities ( 2,200 ) ( 8,633 ) ( 19,454 ) Net cash provided by operating activities 91,757 71,544 50,833 Cash flows from investing activities: Issuance of notes receivable to franchisees ( 125 ) ( 325 ) ( 130 ) Proceeds from notes receivable to franchisees 303 94 — Capitalized software development costs ( 13,096 ) ( 11,209 ) ( 7,705 ) Cash consideration paid for asset acquisitions ( 4,922 ) — ( 6,895 ) Cash paid for asset disposals ( 32 ) — — Purchase of property and equipment ( 5,671 ) ( 979 ) ( 4,452 ) Net cash used for investing activities ( 23,543 ) ( 12,419 ) ( 19,182 ) Cash flows from financing activities: Customer premiums, net ( 481 ) 994 ( 75 ) Debt issuance cost ( 7,944 ) ( 621 ) — Repayment of notes payable ( 101,700 ) ( 9,422 ) ( 16,875 ) Proceeds from notes payable 306,374 25,000 — Proceeds from the issuance of Class A common stock 13,967 12,235 9,898 Repurchases of Class A common stock ( 81,720 ) ( 63,184 ) — Member distributions ( 64,224 ) ( 4,829 ) ( 10,939 ) Payments pursuant to tax receivable agreement ( 6,736 ) ( 5,372 ) — Dividends to stockholders ( 145,786 ) — — Net cash used for financing activities ( 88,250 ) ( 45,199 ) ( 17,991 ) Net increase (decrease) in cash and cash equivalents, and restricted cash ( 20,036 ) 13,926 13,660 Cash and cash equivalents, and restricted cash, beginning of period 57,973 44,047 30,387 Cash and cash equivalents, and restricted cash, end of period $ 37,937 $ 57,973 $ 44,047 78 Year Ended December 31, 2025 2024 2023 Supplemental disclosure of cash flow data: Cash paid during the year for interest $ 21,711 $ 6,876 $ 6,369 Cash paid for income taxes 929 631 701 Cash paid pursuant to tax receivable agreement 7,371 5,372 421 See Notes to the Consolidated Financial Statements 79 Goosehead Insurance, Inc. Notes to consolidated financial statements 1. Organization On May 1, 2018 Goosehead Insurance, Inc. ("GSHD") completed the Offering of 9,810 thousand shares of Class A common stock at a price of $ 10.00 per share, which included 1,280 thousand shares issued pursuant to the underwriter's over-allotment option. GSHD became the sole managing member of Goosehead Financial, LLC (“GF”). GF was organized on January 1, 2016 as a Delaware Limited Liability Company and is headquartered in Westlake, TX. The operations of GF represent the predecessor to GSHD prior to the Offering, and the consolidated entities of GF are described in more detail below. GSHD (collectively with its consolidated subsidiaries, the “Company”) provides personal and commercial property and casualty insurance brokerage services for its clients through a network of corporate-owned offices and franchise units across the nation. The operations of the corporate-owned offices are recorded in Texas Wasatch Insurance Services, L.P. (“TWIS”)—a Texas limited partnership headquartered in Westlake, TX and operating since 2003. 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, 2025, 14 at December 31, 2024, and 14 at December 31, 2023. The operations of the franchise units are recorded in Goosehead Insurance Agency, LLC (“GIA”)—a Delaware limited liability company headquartered in Westlake, TX and operating since 2011. GIA is 100 % owned by GIH, which is 100 % owned by GF. Franchisees are provided access to insurance Carrier Appointments, product training, technology infrastructure, client service centers and back office services. During years ended December 31, 2025, 2024, and 2023, the Company onboarded 101 , 97 , and 209 franchise locations, respectively and had 1,009 , 1,103 , and 1,226 operating franchise locations as of December 31, 2025, 2024 and 2023, respectively. No franchises were purchased by the Company during the years ended December 31, 2025, 2024, and 2023. In connection with the Offering, both Goosehead Management, LLC (“GM”) and Texas Wasatch Insurance Holdings Group LLC (“TWIHG”) became wholly owned indirect subsidiaries of GF. Both GM and TWIHG are non-operating holding companies created to receive management fees from the operating entities TWIS and GIA. Reorganization Transactions In connection with the Offering, the Company completed the following transactions (the "Reorganization Transactions"): • The GF limited liability company agreement was amended to, among other things, i) appoint GSHD as the sole managing member of GF and ii) modify the capital structure of GF by reclassifying the interests previously held by Pre-IPO LLC Members into a single new class of non-voting LLC Units. • GSHD was authorized to issue two classes of common stock. 9,810 thousand shares of Class A common stock were issued pursuant to the Offering, including the underwriters' over-allotment option. 22,747 thousand shares of Class B common stock were issued to the Pre-IPO LLC Members in an amount equal to the number of LLC Units held by each such Pre-IPO LLC Member in exchange for certain management rights of GF. Each share of Class A common stock and Class B common stock entitles its holder to one vote per share on all matters submitted to a vote of GSHD's stockholders. Each share of Class B common stock can be exchanged for one share of Class A common stock or, at GSHD's discretion, a cash payment equal to the volume weighted average market price of one share of Class A common stock, thus canceling the share of Class B common stock on a one -for-one basis. • The Goosehead Management Holders and Texas Wasatch Holders indirectly transferred their ownership interests in GM and TWIHG, respectively, to GSHD in exchange for the Goosehead Management Note and Texas Wasatch Note. The aggregate principal amount of the Goosehead Management Note and the Texas Wasatch Note was approximately $ 114 million. Because the net proceeds from the Offering were insufficient to repay the aggregate principal amount of the notes, 3,724 thousand shares of Class A common stock were issued to the Goosehead Management Holders and the Texas Wasatch Holders for the difference. GSHD contributed direct and indirect ownership interests in each of TWIHG and GM to GF. 80 Following completion of the Reorganization Transactions and the Offering, GSHD owned 37.3 % of GF and the Pre-IPO LLC Members owned the remaining 62.7 %. GSHD is the sole managing member of GF and holds the sole voting power and management control. Accordingly, GSHD consolidates the financial results of GF and reports noncontrolling interest in GSHD's consolidated financial statements. 2. Basis of presentation and significant accounting policies Basis of Presentation The accompanying audited consolidated financial statements of GSHD and our subsidiaries are presented in accordance with the rules and regulations of the SEC for annual reports on Form 10-K and are prepared in accordance with U.S. GAAP. All intercompany accounts and transactions have been eliminated in consolidation. Reclassification Certain amounts previously reported in the prior period financial statements have been reclassified for comparative purposes to conform to the current period's presentation. 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 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. Cash and cash equivalents The Company maintains its cash in bank deposit accounts that, at times, may exceed federally insured limits; however, the Company has not historically experienced any losses in these accounts. The Company believes it is not exposed to any significant credit risk. The Company earns interest on its cash balance that is held in interest-bearing checking accounts. During the years ended December 31, 2025 and 2024, the Company recognized $ 2.9 million and $ 1.6 million, respectively, in interest income within Other income (expense) in the Consolidated Statements of Operations. No interest was earned during the year ended December 31, 2023. As of December 31, 2025, 2024 and 2023, the Company did not have any cash equivalents. Restricted cash The Company holds premiums received from the insured, but not yet remitted to the insurance carrier in a fiduciary capacity. Premiums received but not yet remitted included in restricted cash were $ 3.5 million and $ 3.7 million as of December 31, 2025 and 2024, respectively. The following is a reconciliation of our cash and cash equivalents and restricted cash balances as presented in the consolidated statements of cash flows for the years ended December 31, 2025, 2024, and 2023 ( in thousands ): December 31, 2025 2024 2023 Cash and cash equivalents $ 34,390 $ 54,280 $ 41,956 Restricted cash 3,547 3,693 2,091 Cash and cash equivalents, and restricted cash $ 37,937 $ 57,973 $ 44,047 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 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 81 contract effective date and generally are based on a percentage of premiums for insurance coverage. During 2025, the Company wrote with over 200 insurance carriers, of which 76 provided national coverage. In 2025, two carriers represented more than 10% of total revenue at 19 % and 13 %. 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 %. In select states, agents have the option to charge an agency fee for the placement of the insurance policy. These non-refundable fees are recorded as receivable on the date the policy is effective with the insurance carrier. 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, which anticipated loss is charged to bad debts. The agency fees receivable balance consists of numerous small-balance, homogeneous accounts. The Company calculates the allowance based on collection history and writes off all uncollected agency fee balances outstanding over ninety days. 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, 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 historically had 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 elected 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. The imputed interest is recorded as a discount on the franchise fee receivable and amortized using the effective interest rate method over the life of the payment plan. The amount of interest recorded in 2025, 2024, and 2023 related to franchise fees on a payment plan was $ 0.7 million, $ 0.9 million, and $ 1.4 million, respectively, and is included in Interest income. 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, which anticipated loss is 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 are written off if the franchisee owing the balance terminates. Royalty fees receivable Royalty fees are recorded at the point in time when the policy becomes effective with the insurance carrier. The royalty fees are secured by the commissions of the franchisee with no historical losses incurred for uncollectible royalty fees. As such, there is no allowance for doubtful accounts relating to royalty fees. Revenue recognition 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 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. The Company adjusts its estimate of revenue recognized based on cash collections. The Company also recognizes revenue for initial franchise fees generated from a contract between the Company and a franchisee. Initial franchise fees are recognized as revenue over the 10-year life of the franchise contract, beginning on the start date of the contract. Certain costs to obtain or fulfill a contract are capitalized. The Company capitalizes the commission payments paid to obtain new franchise contracts. These deferred costs are amortized over the expected life of the underlying franchise fee, and are included in Other assets in the Company's consolidated balance sheets. See Note 3 Revenues for further explanation of the Company's revenue recognition policy. 82 Property & equipment The Company carries fixed assets at cost, less accumulated depreciation, as stated in the accompanying consolidated balance sheets. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful life of five years for furniture, fixtures and equipment and three years for computer equipment. Leasehold improvements are also amortized using the straight-line method and are amortized over the shorter of the remaining term of the lease or the useful life of the improvement. Expenditures for improvements are capitalized, and expenditures for maintenance and repairs are expensed as incurred. Upon sale or retirement, the cost and related accumulated depreciation and amortization is removed from the related accounts, and the resulting gain or loss, if any, is reflected in income. 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 (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. We made no purchases of books of business during the year ended December 31, 2024. Total purchases of books of business during the year ended December 31, 2025 were $ 4.9 million. Asset Impairment The Company reviews all of its identifiable assets for impairment periodically and whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. 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 tangible assets during the year ended December 31, 2025, the Company identified three office leases that would be exited or subleased and completed a recoverability assessment for assets at each 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 $ 1.6 million for property and equipment and $ 3.1 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, 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 of property and equipment and $ 0.2 million of 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. 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 $ 1.4 million of property and equipment and $ 1.1 million of 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 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. 83 No additional impairment was identified during the years ended December 31, 2025, 2024, and 2023. Premiums payable Premiums payable represent premium payments that have been received from insureds but not yet remitted to the insurance carriers. Deferred financing costs 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 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. 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. 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. Income Taxes The Company accounts for income taxes pursuant to the asset and liability method, which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse. Any effects of changes in income tax rates or laws are included in income tax expense in the period of enactment. Advertising The Company expenses advertising costs as they are incurred. Advertising expense for the years ended December 31, 2025, 2024, and 2023 was $ 1.3 million, $ 1.0 million, and $ 0.9 million, respectively, and is included within general and administrative expenses in the consolidated statements of operations. Recently adopted accounting pronouncements 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. 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. The standard also requires the Company to annually disclose its income taxes paid (net of refunds received), disaggregated by jurisdiction. This guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The standard is to be applied on a prospective basis, although optional retrospective application is permitted. The Company adopted this ASU for the annual period ended December 31, 2025. Refer to our income tax disclosure in "Note 10. Income taxes" for more information. 84 Accounting pronouncements not yet adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . The amendment requires additional disclosures of certain costs and expenses within the notes to the consolidated financial statements. Additionally, in January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 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 consolidated financial statement disclosures. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses—(Topic 326)—Measurement of Credit Losses for Account Receivable and Contract Assets. The amendments provide for a practical expedient that an entity may assume that conditions as of the balance sheet date remain unchanged over the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from revenue transactions from contracts with customers. The guidance is effective for annual reporting periods beginning after December 15, 2025, and should be applied prospectively. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. In September 2025, the FASB issued ASU No. 2025-06, Intangibles —Goodwill and Other—Internal-Use Software (Subtopic 350-40)—Targeted Improvements to the Accounting for Internal-Use Software. The amendments improve the accounting for costs related to internal-use software. The new guidance eliminates project stages and requires capitalizing software costs to begin when (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. When evaluating if a project is probable to be completed, significant development uncertainty must be assessed. Additionally, disclosures for property, plant and equipment will be required for all capitalized software costs. The guidance is effective for annual reporting periods beginning after December 15, 2027, with early adoption permitted as of the beginning of an annual reporting period. Upon adoption, the guidance may be applied prospectively, retrospectively or using a modified transition approach. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements. 3. Revenues Commissions and agency fees The Company earns commissions, which are paid as a percentage of the policy premiums placed by the Company, by performing its obligation to identify, place, and make effective insurance coverage on behalf of its customer, the insured. The Company defines the term of the policy as the contractual period the policy provides insurance coverage to the insured, which is typically 1 year or less. Commissions earned for the placement of the initial policy term for a given insurance product are recorded as New Business Commissions. New Business Commissions are earned at a point in time on the effective date of the policy, which is when the customer’s unilateral right to cancel the policy without consideration expires, as the Company has no further performance obligations for the initial term once the policy is placed and made effective. After the initial policy term for a given insurance product, the Company earns Renewal Commissions by assisting the customer to make effective a renewal policy that satisfies the customer’s current insurance coverage needs. The Company performs this obligation by monitoring the customer’s policy to ensure a renewal is offered by the carrier and that the client promptly pays the premium. Alternatively, based on the needs of the customer, the Company may assist the customer to adjust coverage terms to satisfy its current insurance coverage needs or the Company may assist the customer to re-shop the insurance coverage to identify, place, and make effective a policy that better meets those needs. Renewal Commissions are earned at a point in time upon the effective date of the renewal policy term or upon the effective date of the replacement policy identified, placed, and made effective for the customer, which is when the customer’s unilateral right to non-renew the policy expires, as the Company has no further performance obligations for that renewal policy term. The transaction price for commissions revenue is set as an estimate of the variable consideration to be received for the current policy term. 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. This variable consideration is constrained to the extent that it is probable there will not be a significant reversal of revenue. For Agency Fees, the Company enters into a contract with the insured, in which the Company's performance obligation is to place an insurance policy. The transaction price of the agency fee is set at the time the sale is 85 agreed upon, and is included in the contract. Agency Fee revenue is recognized at a point in time, which is the effective date of the policy. Contingent commission revenue is generated from contracts between the Company and insurance carriers, for which the Company is compensated for certain growth, profitability, or other performance-based metrics. The performance obligations for contingent commissions will vary by contract, but generally include the Company increasing profitable written premium with the insurance carrier. The transaction price for contingent commissions is estimated based on all available information and is recognized over time as the Company completes its performance obligations, as the underlying policies are placed, net of a constraint. The Company must estimate the amount of consideration that will be received such that a significant reversal of revenue is not probable. Contingent commissions represent a form of variable consideration associated with the placement and profitability of coverage, for which we earn commissions. 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. 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 Franchise revenues include initial franchise fees and ongoing new and renewal royalty fees from franchisees. Revenue from Initial Franchise Fees is generated from a contract between the Company and a franchisee. The Company's performance obligation is to provide initial training, onboarding, ongoing support and use of the Company's business operations over the period of the franchise agreement. The transaction price is set by the franchise agreement and revenue is recognized over time as the Company completes its performance obligations. Initial franchise fees are recognized as revenue over the 10-year life of the franchise contract, beginning on the start date of the contract. Revenue from New and Renewal Royalty Fees is recorded by applying the sales- and usage-based royalties exception. Under the sales- and usage-based exception, the Company 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. 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. This variable consideration is constrained to the extent that it is probable there will not be a significant reversal of revenue. Contract Costs 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 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. Performance obligations satisfied in previous periods During the year ended December 31, 2025, the Company recognized $ 3.0 million in Commissions and agency fees and $ 1.0 million in Franchise revenues due to the release of the constraint on certain variable consideration related to policies placed and made effective in previous periods. The Company did not recognize any revenue related to performance obligations satisfied in previous periods for the years ended December 31, 2024, or 2023. 86 Disaggregation of Revenue The following tables disaggregates revenue by source (in thousands) : Year Ended December 31, 2025 2024 2023 Type of revenue stream: Commissions and agency fees Renewal commissions $ 78,621 $ 74,938 $ 70,730 New business commissions 27,985 24,608 23,411 Agency fees 10,404 8,127 8,174 Contingent commissions 38,376 31,385 13,746 Franchise revenues Renewal royalty fees 170,767 138,942 107,524 New business royalty fees 30,153 27,122 23,168 Initial franchise fees 5,594 6,620 11,238 Other franchise revenues 2,734 1,831 1,843 Interest income 670 932 1,443 Total revenues $ 365,304 $ 314,505 $ 261,276 Timing of revenue recognition: Transferred at a point in time $ 117,010 $ 107,673 $ 102,315 Transferred over time 248,294 206,832 158,961 Total revenues $ 365,304 $ 314,505 $ 261,276 Contract Balances The following table provides information about receivables, cost to obtain, and contract liabilities from contracts with customers (in thousands) : December 31, 2025 2024 Increase/(decrease) Cost to obtain franchise contracts (1) $ 1,801 $ 1,967 $ ( 166 ) Commissions and agency fees receivable, net (2) 36,613 31,375 5,238 Receivable from franchisees, net (2) 14,077 14,546 ( 469 ) Contract liabilities (2)(3) 16,266 18,466 ( 2,200 ) (1) Cost to obtain franchise contracts is included in Other assets on the consolidated balance sheets. (2) Includes both the current and long term portion of this balance. (3) Initial Franchise Fees to be recognized over the life of the contract Significant changes in contract liabilities are as follows (in thousands) : December 31, 2025 2024 Contract liability at beginning of period $ 18,466 $ 27,099 Revenue recognized during the period ( 5,594 ) ( 6,620 ) New deferrals (1) 3,930 3,125 Write offs (2) ( 536 ) ( 5,138 ) Contract liability at end of period $ 16,266 $ 18,466 (1) Initial franchise fees where the consideration is received from the customer for services which are to be transferred to the franchisee over the term of the franchise agreement (2) Franchise Fees, net of recognized revenue, no longer deferred due to the termination of the Franchise Agreement. 87 Anticipated Future Recognition of Deferred Initial Franchise Fees The following table reflects the estimated initial franchise fees (contract liability) to be recognized in the future related to performance obligations that are unsatisfied at the end of the period (in thousands) : Estimate for the year ended December 31: 2026 $ 3,241 2027 2,741 2028 2,506 2029 2,225 2030 1,889 Thereafter 3,664 $ 16,266 4. Franchise fees receivable The balance of Franchise fees receivable included in receivable from franchisees in the consolidated balance sheets consisted of the following (in thousands) : December 31, 2025 2024 Franchise fees receivable $ 4,844 $ 6,263 Less: Unamortized discount ( 904 ) ( 1,671 ) Less: Allowance for uncollectible franchise fees ( 40 ) ( 35 ) Total franchise fees receivable $ 3,900 $ 4,557 Activity in the allowance for uncollectible franchise fees was as follows (in thousands) : Balance at December 31, 2023 $ 223 Charges to bad debts 404 Write offs ( 592 ) Balance at December 31, 2024 35 Charges to bad debts 142 Write offs ( 137 ) Balance at December 31, 2025 $ 40 5. Allowance for uncollectible agency fees Activity in the allowance for uncollectible agency fees was as follows (in thousands) : Balance at December 31, 2023 $ 508 Charges to bad debts 1,469 Write offs ( 1,614 ) Balance at December 31, 2024 $ 363 Charges to bad debts 1,316 Write offs ( 1,190 ) Balance at December 31, 2025 $ 489 88 6. Property and equipment Property and equipment consisted of the following at (in thousands) : December 31, 2025 2024 Furniture & fixtures $ 10,268 $ 10,369 Computer equipment 6,552 5,443 Network equipment 802 481 Phone system 200 227 Leasehold improvements 37,387 35,288 Total 55,209 51,808 Less accumulated depreciation ( 33,660 ) ( 27,707 ) Property and equipment, net $ 21,549 $ 24,101 Depreciation expense was $ 6.7 million, $ 7.3 million, and $ 7.6 million for the years ended December 31, 2025, 2024, and 2023, respectively. 7. Intangible assets Intangible assets consisted of the following (in thousands) : December 31, Weighted average amortization period (years) 2025 2024 Computer software & web domain $ 38,738 $ 24,475 7.48 Books of business 11,817 6,895 6.52 Less accumulated amortization ( 10,856 ) ( 6,294 ) Intangible assets, net $ 39,700 $ 25,075 Amortization expense was $ 4.6 million, $ 3.2 million, and $ 1.7 million for the years ended December 31, 2025, 2024, and 2023, respectively. Expected amortization for the next five calendar years as of December 31, 2025 are as follows (in thousands) : 2026 $ 5,779 2027 5,764 2028 5,764 2029 5,704 2030 and thereafter 16,688 Total $ 39,700 8. Employee benefit obligation The Company has adopted a qualified deferred compensation plan under section 401(k) of the Internal Revenue Code. Full-time employees over the age of 21 with one month of service are eligible to participate. Under the plan, the Company’s contribution is based on a discretionary matching of 100 % of salary deferral elected by each eligible employee up to a maximum of 3 % of compensation. The Company’s matching portion vests over a four-year period, after which time the employee becomes fully vested and all future contributions will vest immediately. Matching contributions may be changed at the discretion of the Company. Company contributions totaled $ 1.7 million, $ 1.5 million, and $ 1.5 million for the years ended December 31, 2025, 2024, and 2023. 89 9. Debt On July 21, 2021, the Company entered into the Second Amended and Restated Credit Agreement (the "Second Amended and Restated Credit Agreement") to refinance 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 revolving credit facility and term note were collateralized by substantially all the Company's assets, which included 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. 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. The 2025 Credit Agreement replaced the Second Amended and Restated Credit Agreement, which was repaid with the proceeds of the 2025 Initial Term Loan and terminated. The Company recorded $ 6.8 million of debt issuance costs and original issue discount related to the 2025 Initial Term Loan within Notes Payable and $ 1.8 million of debt issuance costs related to the 2025 Revolving Credit Facility within Other Assets in the consolidated balance sheets. 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 B-1 Loan 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. As of December 31, 2025, the Company had nothing drawn against the revolving credit facility and had $ 75.0 million available to draw. Our long term debt consists of the following (in thousands) : December 31, 2025 Term Loan B-1 298,502 Unamortized discount and issuance costs ( 6,048 ) Current portion of note payable ( 2,993 ) Note payable, net of current portion $ 289,461 The Term B-1 Loan bears interest at a rate of Term SOFR plus 3.00 %. The 2025 Revolving Credit Facility bears interest at Term SOFR plus a spread based on leverage ratio tiers as follows: Leverage Ratio Interest Rate < 1.50 x SOFR + 175 bps > 1.50 x SOFR + 200 bps > 2.50 x SOFR + 225 bps > 3.50 x SOFR + 250 bps Interest payments on the revolving credit facility totaled $ 0.2 million, $ 0.2 million, $ 0.1 million for the years ended December 31, 2025, 2024, and 2023, respectively. The effective interest rate for the term note as of December 31, 2025 was 7.17 %. Maturities of the term note payable for the next five calendar years as of December 31, 2025 are as follows (in thousands) : 90 Amount 2026 $ 2,993 2027 2,993 2028 2,993 2029 2,993 2030 2,993 Thereafter 283,537 Total $ 298,502 The 2025 Credit Agreement contains certain affirmative and negative covenants. Under these covenants, the Company is limited in the amount of additional debt incurred and distributions payable. The Company's maximum allowable trailing twelve months debt-to-EBITDA ratio, as defined by the 2025 Credit Agreement, is 5.00 to 1.00. Additionally, the 2025 Credit Agreement contains certain change of control provisions that, if breached, would trigger a default. As of December 31, 2025, the Company was in compliance with these covenants. Because of both instruments’ variable interest rate, the note payable balances at December 31, 2025 and December 31, 2024 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. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy are described as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets. • Level 2—Significant other observable inputs other than Level 1 prices such as quoted prices in markets that are not active, quoted prices for similar assets or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset. • Level 3—Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. 10. Income taxes 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. federal and most applicable state and local income tax purposes. As a partnership, GF is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by GF is passed through to and included in the taxable income or loss of its members, including GSHD, on a pro rata basis. GSHD is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to GSHD's allocable share of income of GF. Income tax expense The components of income tax expense are as follows (in thousands) : 91 Year Ended December 31, 2025 2024 2023 Current income taxes Federal $ ( 9 ) $ — $ — State and local 518 1,332 755 Total current income taxes 509 1,332 755 Deferred income taxes Federal 6,531 5,973 3,169 State and local ( 643 ) ( 9,718 ) ( 1,232 ) Total deferred income taxes 5,888 ( 3,745 ) 1,937 Income tax $ 6,397 $ ( 2,413 ) $ 2,692 A reconciliation of income tax expense computed at the U.S. federal statutory income tax rate to the income tax expense recognized is as follows (in thousands) : Year Ended December 31, 2025 2024 2023 $ % $ % $ % Income before taxes $ 50,848 $ 46,700 $ 26,388 Income taxes at U.S. federal statutory rate 10,678 21.0 % 9,807 21.0 % 5,541 21.0 % Tax effect of income not subject to entity level federal income tax ( 3,547 ) ( 7.0 ) ( 3,929 ) ( 8.5 ) ( 2,034 ) ( 7.8 ) Nontaxable or nondeductible items: Excess tax (benefit) or deficiency on equity-based compensation ( 2,146 ) ( 4.2 ) ( 3,060 ) ( 6.6 ) ( 1,760 ) ( 6.7 ) Nondeductible equity-based compensation 721 1.4 731 1.6 127 0.5 Nondeductible excess compensation 691 1.4 313 0.7 1,028 3.9 Meals and entertainment 229 0.5 178 0.4 152 0.6 State income tax expense (benefit), net of federal benefit (1) ( 100 ) ( 0.2 ) ( 6,530 ) ( 14.0 ) ( 329 ) ( 1.2 ) Other ( 129 ) ( 0.3 ) 77 0.2 ( 33 ) ( 0.1 ) Income tax expense (benefit) $ 6,397 12.6 % $ ( 2,413 ) ( 5.2 ) % $ 2,692 10.2 % (1) State taxes in Texas made up the majority (greater than 50%) of the tax effect in this category for 2025.. Deferred tax assets and liabilities The components of deferred tax assets are as follows ( in thousands ): December 31, 2025 December 31, 2024 Net operating loss carryforwards $ 22,705 $ 18,503 Investment in flow-through entity 193,666 174,975 Net deferred tax asset $ 216,371 $ 193,478 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 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 $ 103.0 million and $ 19.4 million (post apportionment pre-tax), respectively. The federal net operating loss carryforwards are carried 92 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 GSHD has determined there are no material uncertain tax positions as of December 31, 2025. Cash paid for income taxes The components of cash paid for income taxes are as follows (in thousands) : Year Ended December 31, 2025 Federal $ 10 State and local Texas 900 Other state and local 19 Total state and local 919 Total $ 929 Tax receivable agreement GF has made an election under Section 754 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”) effective for each taxable year in which a redemption or exchange of LLC Units and corresponding Class B common stock for shares of Class A common stock occurs. Prior redemptions and exchanges have resulted, and future taxable redemptions or exchanges are expected to result in tax basis adjustments to the assets of GF that will be allocated to the Company and thus produce favorable tax attributes. These tax attributes would not be available to us in the absence of those transactions. 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 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, 2025, 2024 and 2023, an aggregate of 0.7 million, 0.3 million and 1.5 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 0.7 million, 0.3 million and 1.5 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 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, 2025 and 2024, the total amount of payments due to the Pre-IPO LLC Members under the tax receivable agreement was $ 171.9 million and $ 160.1 million, respectively, of which $ 6.2 million and $ 0.0 million, respectively, was current and included in Liabilities under tax receivable agreement within Current liabilities on the Consolidated balance sheets. 11. Stockholder's equity Class A Common Stock GSHD has a total of 24,653 thousand and 24,668 thousand shares of its Class A common stock outstanding at December 31, 2025 and 2024, respectively. Each share of Class A common stock holds economic rights and entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. 93 Class B Common Stock GSHD has a total of 11,935 thousand and 12,620 thousand shares of its Class B common stock outstanding at December 31, 2025 and 2024, respectively. Each share of Class B common stock has no economic rights but entitles its holder to one vote per share on all matters submitted to a vote of the stockholders of GSHD. Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to GSHD's stockholders for their vote or approval, except as otherwise required by applicable law, by agreement, or by GSHD's certificate of incorporation. Earnings Per Share The following table sets forth the calculation of basic earnings per share ("EPS") based on net income attributable to GSHD for the years ended December 31, 2025, 2024, and 2023, divided by the basic weighted average number of Class A common stock as of December 31, 2025, 2024, and 2023 (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. Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to Goosehead Insurance, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. Shares of the Company’s Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related LLC Units, are exchangeable into shares of Class A common stock on a one -for-one basis. The Company calculates the effects of the conversion of Class B shares to Class A shares using the "if-converted" method and includes such effects in the calculation of diluted EPS if the effects are dilutive. The following table summarizes the calculation of EPS for the years ended December 31, 2025, 2024, and 2023 (in thousands) : Year Ended December 31, 2025 2024 2023 Numerator: Net income attributable to GSHD - Basic $ 27,831 $ 30,426 $ 14,140 Add: net income attributable to noncontrolling interests (1) 16,620 18,687 9,556 Less: income tax effect on income attributable to noncontrolling interests assuming conversion of Class B common shares (1) ( 4,837 ) ( 4,767 ) ( 2,524 ) Net income available to GSHD - Diluted $ 39,614 $ 44,347 $ 21,172 Denominator: Basic EPS Weighted average outstanding Class A common shares - Basic 24,975 24,657 23,929 Earnings per share of Class A common stock - Basic $ 1.11 $ 1.23 $ 0.59 Diluted EPS Weighted average outstanding Class A common shares - Basic 24,975 24,657 23,929 Effect of dilutive securities: Weighted average outstanding Class B common shares (if-converted) (1) 12,224 12,749 13,769 Stock options (2) 905 895 657 Weighted average outstanding Class A common shares - Diluted 38,103 38,301 38,356 Earnings per share of Class A common stock - Diluted $ 1.04 $ 1.16 $ 0.55 (1) For the years ended December 31, 2025, 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) 12,224 thousand, 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) $ 11.8 million, $ 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. (2) The dilutive effect of stock options is computed using the treasury stock method. 731 thousand, 869 thousand, and 1,560 thousand stock options were excluded from the computation of diluted earnings per share of Class A common stock for the years ended December 31, 2025, 2024 and 2023 because the effect would have been anti-dilutive. 94 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. 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, 2025, the Company repurchased and retired 1,014 thousand shares of Class A common stock for an aggregate $ 81.7 million. 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, 2025, the Company had remaining authorization under the share repurchase program to repurchase up to $ 18.3 million of the Company's Class A common stock. Subsequent Event On February 17, 2026, our board of directors extended our share repurchase program, increasing the authorization by $ 180.0 million and extending the program through May 1, 2027. With this increase, the Company has a total remaining authorization under the extended repurchase program of up to $ 198.3 million of the Company's Class A common stock . 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 and cancel an LLC unit of GF held by the Company, at a price per LLC unit equal to the price paid for the corresponding share of Class A common stock. 12. Noncontrolling interest GSHD is the sole managing member of GF and, as a result, it consolidates the financial results 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. For the years ended December 31, 2025 and 2024, GF made distributions of $ 23.8 million and $ 13.3 million, of which $ 7.7 million and $ 4.8 million was made to Pre-IPO LLC Members. The remaining $ 16.0 million and $ 8.5 million was made to GSHD and was eliminated in consolidation. Under the amended and restated Goosehead Financial, LLC Agreement ("GF LLC Agreement"), the Pre-IPO LLC Members have the right, from and after the completion of the Offering (subject to the terms of the amended and restated Goosehead Financial, LLC Agreement), to require GSHD to redeem all or a portion of their LLC Units for, at GSHD's election, newly-issued shares of Class A common stock on a one -for-one basis or a cash payment equal to the volume weighted average market price of one share of GSHD's Class A common stock for each LLC Unit redeemed (subject to customary adjustments, including for stock splits, stock dividends and reclassifications) in accordance with the terms of the amended and restated Goosehead Financial, LLC Agreement. Additionally, in the event of a redemption request by a Pre-IPO LLC Member, GSHD may, at its option, effect a direct exchange of cash or Class A common stock for LLC Units in lieu of such a redemption. Shares of Class B common stock will be canceled on a one -for-one basis if GSHD, at the election of a Pre-IPO LLC Member, redeems or exchanges LLC Units of such Pre-IPO LLC Member pursuant to the terms of the amended and restated Goosehead Financial, LLC Agreement. Except for transfers to GSHD pursuant to the amended and restated Goosehead Financial, LLC Agreement or to certain permitted transferees, the Pre-IPO LLC Members are not permitted to sell, transfer or otherwise dispose of any LLC Units or shares of Class B common stock. During 2025 and 2024, an aggregate of 0.7 million and 0.3 million LLC Units, respectively, were redeemed by the noncontrolling interest holders. Pursuant to the GF LLC Agreement, we issued 0.7 million and 0.3 million shares of 95 Class A common stock in connection with these redemptions and received 0.7 million and 0.3 million LLC Interests, increasing our ownership interest in GF. Simultaneously, and in connection with these redemptions, 0.7 million and 0.3 million shares of Class B common stock were surrendered and canceled. The following table summarizes the ownership interest in GF as of December 31, 2025 and 2024 (in thousands): December 31, 2025 December 31, 2024 LLC Units Ownership % LLC Units Ownership % Number of LLC Units held by GSHD 24,653 67.4 % 24,668 66.2 % Number of LLC Units held by noncontrolling interest holders 11,935 32.6 % 12,620 33.8 % Number of LLC Units outstanding 36,588 100.0 % 37,288 100.0 % 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, 2025 and 2024 was 32.9 % and 34.1 %, respectively. 13. Equity-based compensation A summary of equity-based compensation expense during the years ended December 31, 2025, 2024, and 2023 is as follows (in thousands) : Year Ended December 31, 2025 2024 2023 Stock options $ 23,375 $ 27,971 $ 23,989 Equity-based compensation expense $ 23,375 $ 27,971 $ 23,989 Stock options The Company granted additional stock options of 0.6 million, 0.8 million, and 0.9 million to its Board of Directors and certain key employees in 2025, 2024, and 2023, respectively. Board of Directors stock option awards have a three-year service period and vest in 12 equal quarterly installments over the service period. Employee stock options awards granted in 2021 have a four-year service period and vest in three equal annual installments, beginning at the end of the second year of service. Employee awards granted beginning in 2022 have a three-year service period and vest in equal annual installments beginning at the end of the first year of service. Both Board of Director and employee stock option awards have a maximum contract term of ten years from the grant date. Upon exercise of an option, the Company issues a new share of stock. The Company determines the grant date fair value of its stock option awards using the Black-Scholes valuation model and has elected to recognize forfeitures as they occur. A summary of the weighted average assumptions used for valuing stock options granted in the periods 2025, 2024, and 2023 are as follows: Year Ended December 31, 2025 2024 2023 Expected volatility 55 % 55 % 60 % - 65 % Expected dividend yield — % — % — % Expected term (in years) 2.69 - 4.75 2.75 - 4.75 2.75 - 4.75 Risk-free interest rate 3.44 % - 4.27 % 3.46 %- 4.58 % 3.44 % - 4.06 % A summary of stock option activity for the year ended December 31, 2025 is as follows ( in thousands except per-share amounts ): 96 Stock Options Weighted-average Exercise Price Aggregate Intrinsic Value Weighted-average Remaining Contractual Life (Years) Outstanding as of December 31, 2024 3,263 $ 68.50 Granted 637 106.42 Exercised ( 309 ) 43.75 Forfeited ( 56 ) 68.02 Expired ( 100 ) 125.79 Outstanding as of December 31, 2025 3,436 $ 76.11 $ 51,810 6.88 Options vested and exercisable as of December 31, 2025 2,091 $ 71.09 $ 42,923 5.90 Options unvested as of December 31, 2025 1,344 $ 83.93 $ 8,887 8.40 A summary of stock option activity for the years ended December 31, 2025, 2024 and 2023 is as follows ( in thousands except per-share amounts ): Year Ended December 31, 2025 2024 2023 Weighted-average grant-date fair value of options granted $ 46.36 $ 32.41 $ 19.08 Total intrinsic value of options exercised $ 21,435 $ 27,106 $ 16,424 Total fair value of shares vested during the year $ 28,555 $ 24,645 $ 23,269 A summary of unvested stock option activity for the years ended December 31, 2025, 2024 and 2023 is as follows ( in thousands except per-share amounts ): Stock Options Weighted Average Grant Date Fair Value Unvested as of December 31, 2024 1,657 $ 30.10 Vested ( 894 ) 31.94 Granted 637 46.36 Forfeited ( 56 ) 31.86 Unvested as of December 31, 2025 1,344 $ 36.51 As of December 31, 2025, total unrecognized compensation expense related to unvested stock options was $ 29.7 million, which is expected to be recognized over a weighted average period of 1.81 years. Cash received from stock option exercises during the year ended December 31, 2025 was $ 13.6 million. 14. Dividends The Company did not approve or pay any dividends during the year ended December 31, 2024. 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. 97 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: 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. 15. Leases At December 31, 2025, Goosehead was obligated under a number of operating leases, exclusively leases for premises and equipment used for business purposes. These leases generally have terms of 8 years or less, determined based on the contractual maturity of the lease, and include periods covered by options to extend or terminate the lease when the Company is reasonably certain that it will exercise those options. 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 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. We estimate this for our portfolio of leases using information obtained from our bankers. 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 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, 2025 and 2024 (in thousands) : December 31, 2025 2024 Right-of-use assets $ 34,087 $ 37,420 Short term lease liabilities 8,666 6,535 Long term lease liabilities 51,168 54,536 Total lease liabilities 59,834 61,071 Weighted average remaining lease term (in years) 5.87 6.71 Weighted average incremental borrowing rate 5.5 % 5.3 % The following schedule shows the components of lease cost for the years ended December 31, 2025 and 2024 (in thousands): December 31, 2025 2024 Gross operating lease cost $ 7,923 $ 8,074 Sublease income ( 1,082 ) ( 672 ) Net lease cost $ 6,841 $ 7,402 98 The following is a schedule of supplemental cash flow information related to leases for the year ended December 31, 2025 and 2024 (in thousands): December 31, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ ( 9,250 ) $ ( 11,267 ) Right of use assets obtained in exchange for lease obligation Operating leases $ 5,713 $ 4,931 The following is a schedule of future maturity of lease liability as of December 31, 2025 (in thousands): 2026 $ 11,483 2027 13,083 2028 12,348 2029 11,192 2030 8,341 Thereafter 14,414 Total lease payments 70,861 Less: imputed interest ( 11,026 ) Future maturity of lease liability $ 59,834 As of December 31, 2025, the Company did not have any additional future operating lease commitments that were signed but had not yet commenced. 99 16. Segment information 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. 17. Litigation From time to time, GSHD may be involved in various legal proceedings, lawsuits and claims incidental to the conduct of the Company's business. The Company records accruals for legal contingencies to the extent that it has concluded that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. In the opinion of the Company's management, the likely results of any ongoing legal matters are not expected, either individually or in the aggregate, to have a material adverse effect on the Company's financial position, results of operations or cash flows. On November 10, 2022, a verified stockholder class action complaint for declaratory relief, captioned Mickey Dollens v. Goosehead Insurance, Inc., C.A. No. 2022-1018-JTL, was filed in the Court of Chancery of the State of Delaware (the “Dollens Action”), alleging certain corporate governance documents adopted by the Company were invalid under Delaware law. 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). 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. 18. Related Party Transactions Mark Jones is the Co-Founder and Executive Chairman of the Company and holds a significant beneficial ownership of the Company’s voting common stock. Mr. Jones also serves as the Co-Founder and Chief Executive Officer of N5B Capital ("N5B"), a family investment office for Mark and Robyn Jones. In the third quarter of 2025, the Company entered into an agreement to reimburse N5B for expenses associated with Mr. Jones’ executive assistant. The estimated annual expense to the Company under this agreement is less than $ 140 thousand and will be recognized as incurred in the consolidated statements of operations. The Company determined that the agreement is not material to its consolidated financial statements. 100 Item 9. Changes in and disagreements with accountants on accounting and financial statement disclosure None.