What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-10 compared with 2025-03-27 · 310 added, 413 removed, 378 unchanged (66% of the section changed)

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“Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”.

The following discussion provides commentary on the financial results derived from our audited financial statements for the years ended December 31, 2024, 2023 and 2022 prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The following discussion provides commentary on the financial results derived from our audited financial statements for the years ended December 31, 2025 and 2024 prepared in accordance with GAAP.

In addition, we regularly review the following non-GAAP measures when assessing performance:

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See “Non-GAAP Financial Measures” for further information.

We are a leading, high-growth, independent distribution platform for personal and commercial insurance in the United States.

Discussions of fiscal year 2023 items and year-to-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Form 10-K can be found in “Part II Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on March 27, 2025 and is available on the SEC’s website at www.sec.gov.

We are a leading, high-growth, independent distribution platform for personal and commercial insurance in the U.S.

We are pioneers in the insurance industry, developing an agency model built on innovation and experience with what we believe is a more flexible approach than traditional distribution models.

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Since our founding in 2001 by our Chief Executive Officer, Richard F.

(“Gordy”) Bunch III, we have established a track record of creating solutions for independent agents, insurance carriers and our Clients, with sustainable growth regardless of economic and P&C pricing cycles.

(“Gordy”) Bunch III, we have established a track record of creating solutions for independent agents, insurance carriers and our Clients, with growth regardless of economic and P&C pricing cycles.

We embrace a simple philosophy:

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We treat our Clients, employees and stakeholders like family.

Factors affecting our results of operations

We believe that the most significant factors affecting our results of operations include:

Attracting and retaining experienced agents.

Our long-term growth and success depend, in large part, on our continued ability to attract new agents.

Our growth strategy focuses on attracting experienced end of career and retiring agents that come to us with an existing Book of Business and become Branch principals within our system.

Our value proposition resonates with agents as they have succession planning options built into their contracts.

To facilitate succession planning, we offer independent agents the ability to sell their Books of Business to TWFG, enabling a smooth handover and transition of Client relationships and operational responsibilities.

Branch principals also have a high degree of autonomy in which to operate their business and expand their footprint.

Branches use our comprehensive technology and agency management system, benefiting from enterprise group rates that we believe are typically lower than agents would receive on their own or from leading agency management system vendors.

Insurance carrier relationships.

Our growth and success are dependent on, in large part, our relationship with insurance carriers.

We specialize in creating innovative insurance products that address the specific needs of Clients, a strategy that ultimately benefits our insurance carriers.

Our deep understanding of market trends and consumer demands enables us to develop tailored and forward-thinking solutions that turn into high-growth and profitable lines of business for insurance carriers.

Insurance carriers reward our performance with additional access to business over time.

Additionally, we provide insurance carriers with cost-effective and rapid access to new markets, leveraging our expansive network and market insights.

This approach not only extends the insurance carriers’ reach into diverse Client segments, but also enhances their market presence.

Our role as an intermediary ensures a broad

and varied range of insurance products are available to our Clients, meeting their diverse needs.

This symbiotic relationship with insurance carriers not only broadens their Books of Business, but also ensures our Clients have access to comprehensive, customized insurance options, increasing retention of the business we place for insurance carriers and cementing our role as a pivotal facilitator in the insurance industry.

Reliance on insurance intermediaries .

Our growth and success are dependent, in part, on the financial strength of the insurance carriers we work with and our ability to distribute differentiated insurance products in the market.

If insurance intermediaries or insurance carriers experience liquidity problems, insolvency or other financial difficulties, or do not timely provide required information or payments to us, we could encounter delays in payments owed to us, the loss of insurance carrier appointments, E&O claims and difficulty collecting receivables owed to us by insurance carriers.

The capacity of our insurance products may be subject to restrictions placed by parties outside our control, such as reinsurers, insurance intermediaries, insurance carriers and state regulators.

These conditions may adversely affect our revenue and make it difficult for us to accurately predict our future results, which could harm our business, financial condition and results of our operations.

Investment in technology.

Our continued growth and success depend, in part, on our ability to invest in technology to drive scalability and efficiency.

Agents use our comprehensive technology package that includes an agency management system that is customizable.

Our technology facilitates the sales process, and includes integrated technology features like electronic signatures, personal lines rating and commonly used insurance forms.

It also provides dynamic reporting on retention, renewal and marketing.

We leverage technology to help our agents acquire new Clients with social media, email marketing and text message integration within our agency management system.

We also leverage technology to enhance the Client experience with our proprietary mobile application that allows Clients to access their ID cards and easily communicate with their agents.

Our carrier administration system is equipped for underwriting and policy administration for both admitted and non-admitted programs in multiple states.

Strategic asset acquisitions.

We supplement our organic growth (including the addition of independent branches into our network) and add capabilities through strategic asset acquisitions.

Through strategic asset acquisitions, we have acquired agencies, Books of Business, MGAs, insurance networks and renewal rights across a range of specialties and geographies.

Our acquisition strategy entails crafting a compelling value proposition for acquisition targets including a robust operational backbone, a wide array of insurance products and markets, a collaborative culture and the opportunity for long-term growth.

We also prioritize a transparent and equitable transaction process to help ensure a good relationship and alignment from the beginning, and have implemented a systematic and disciplined integration playbook.

In 2022, we completed two asset acquisitions in excess of $0.5 million in annual revenue for a total purchase price of $7.9 million.

In 2023, we completed five asset acquisitions with annual revenue in excess of $0.5 million for a total purchase price of $19.4 million and acquisition-related expenses of $0.2 million.

In January 2024, we acquired the assets of nine of our independent branches and converted them to Corporate Branches for a total purchase price of $40.8 million.

In addition, in January 2024, we acquired the remaining interests in the assets of our partially owned Corporate Branches for a total purchase price of $5.2 million, converting them to wholly owned Corporate Branches.

In the remainder of 2024, we completed multiple acquisitions with annualized revenue less than $0.5 million, for an aggregate purchase price of $1.6 million.

The valuations of these asset acquisitions were based substantially on the size, growth, loss ratios and pro forma EBITDA of their Books of Business.

See Note 4, “Intangible Assets” to our consolidated financial statements included elsewhere in this Annual Report for information regarding the accounting for these acquired assets and their impact on our consolidated financial condition.

See “—Consolidated Results of Operations” for the impact of these acquisitions on our results of operations.

Insurance industry pricing trends and the effect of natural and man-made disasters.

We generate most of our revenues through commissions, which are calculated as a percentage of the total insurance premium.

A softening of the insurance market or the lines of business we serve, characterized by a period of declining premium rates, could negatively impact our profitability.

Additionally, insurance carrier losses from natural or man-made disasters could impact our contingent income, which is primarily driven by insurance carrier underwriting results and, to a lesser extent, the volume of business we place with them.

Macroeconomic trends.

Macroeconomic factors, including the recent resurgence of inflation and interest rate increases, and the risk that the U.S.

economy will decelerate into a recession, affect the financial services industry and may reduce demand for our services or depress pricing for those services, which could have a material adverse

effect on our costs and results of operations.

During higher inflationary periods, our rent expenses may also increase significantly, which may adversely affect our business, financial condition, results of operations and cash flows.

Furthermore, during inflationary periods, interest rates have historically increased, which would have a direct effect on interest expense if we decide to refinance our existing long-term borrowings or incur any additional indebtedness.

These macroeconomic trends are partially offset by increased commissions due to increased premiums and increases in interest income from interest rate increases and, as a result, we have grown our business and profitability through multiple economic cycles.

Cost of being a public company.

To operate as a public company, we are required to continue to implement changes in certain aspects of our business and develop, manage, and train management level and other employees to comply with ongoing public company requirements.

We will also incur new expenses as a public company, including public reporting obligations, proxy statements, stockholder meetings, stock exchange fees, transfer agent fees, SEC and FINRA filing fees, and offering expenses.

Key Operational and Market Factors Impacting 2025 Results

Our results of operations for the year ended December 31, 2025 were influenced by a combination of operational execution, industry conditions, and strategic actions taken during the year.

The most significant factors impacting our 2025 results, as compared to 2024, are discussed below.

Organic Revenue Growth Driven by Agent Productivity and Retention.

A primary driver of our 2025 results was continued Organic Revenue Growth, which increased by 11.6% year-over-year.

This growth was principally attributable to increases in Total Written Premium generated by existing TWFG Agencies, reflecting higher policy renewal rates, incremental cross-selling of additional lines of coverage, and overall growth in insured values across our personal and commercial lines portfolios.

Our ability to attract and retain experienced agents continued to support this growth.

Many agents joining our platform during prior periods reached higher productivity levels in 2025 as their Books of Business started to mature.

In addition, retention of existing agents remained strong, which contributed to stability in renewal business and predictable commission revenue streams.

These factors collectively contributed to increased commission income without a commensurate increase in fixed operating costs.

Insurance Market Pricing Environment and Commission Dynamics.

The insurance pricing environment during 2025 continued to support revenue growth, although conditions varied by line of business and over the course of the year.

In homeowners insurance, premium rates remained firm throughout the year, reflecting continued pressure from catastrophe losses, reinsurance costs, social inflation and higher insured values, which contributed to increased commission revenue on both new and renewal policies.

In personal auto insurance, the pricing environment began to moderate during the second half of 2025 following several years of significant rate increases.

While premium growth slowed as carriers reduced the pace of rate actions and competitive dynamics began to normalize, commission revenue continued to benefit from the elevated premium base established in prior periods, particularly on renewal business.

Commission rates set by carriers remained generally stable during 2025.

As a result, changes in commission revenue were driven primarily by movements in premiums rather than changes in commission percentages.

Overall, pricing dynamics in 2025 contributed positively to average revenue per policy as compared to 2024, although management observed early signs of stabilization in certain personal lines toward the end of the year.

Management continues to monitor carrier pricing actions and competitive conditions, as further shifts in market dynamics could influence future revenue growth rates.

Acquisitions and Expansion of Corporate Branches.

During 2025, we completed seven acquisitions for total consideration of $51.0 million , which were added as Corporate Branches.

In the second quarter of 2025, we also acquired a 50.1% equity interest in TWFG MGA FL for a total cash consideration of $9.7 million at closing.

These acquisitions contributed incremental revenue during the year, reflecting the full economic benefit of retaining 100% of commission income generated by these operations, offset by the assumption of their operating expenses.

The acquired branches were generally profitable at the time of acquisition and were accretive to both net income and Adjusted EBITDA in 2025.

As a result, acquisition-related growth contributed to total revenue growth in excess of organic growth alone.

Comparability between periods is impacted by the timing of these acquisitions, as results for 2025 include partial-year contributions that were not present in 2024.

Expense Growth and Operating Leverage.

Operating expenses increased in 2025 primarily due to higher compensation costs, technology costs, and incremental public company costs.

Compensation-related expenses increased as we continued to invest in personnel to support agent growth, corporate branch integration, technology initiatives, and compliance requirements associated with being a public company.

Despite these increases, we achieved operating leverage in 2025, as revenue growth outpaced expense growth, resulting in improvements in Adjusted EBITDA and Adjusted EBITDA Margin.

Management continues to focus on balancing investment in growth initiatives with disciplined expense management to support sustainable margin expansion over time.

Technology Investments and Platform Scalability.

Ongoing investment in technology and operational infrastructure supported scalability across our platform in 2025.

Enhancements to our agency management systems, data analytics capabilities, and back-office processes improved operational efficiency and supported higher transaction volumes without proportional increases in headcount.

These investments contributed to improved service levels for agents and clients, supporting organic growth, while also moderating the rate of growth in general and administrative expenses relative to revenue.

Although technology investments increased operating expenses in the near term, management believes they enhance long-term scalability and margin performance.

Our corporate structure

TWFG was incorporated on January 8, 2024 for the purpose of completing the Reorganization Transactions that were completed on July 19, 2024.

Following a reorganization into a holding company structure as part of the Reorganization Transactions, TWFG is a holding company and its sole material asset is a controlling ownership interest in TWFG Holding.

Following our reorganization into a holding company structure as part of the Reorganization Transactions, TWFG, Inc.

is a holding company and its sole material asset is a controlling ownership interest in TWFG Holding.

All of our business is conducted through TWFG Holding and its consolidated subsidiaries, and the financial results of TWFG Holding and its consolidated subsidiaries are included in the consolidated financial statements of TWFG.

Pre-IPO, TWFG Holding was treated as a pass-through entity for U.S.

federal and state income tax purposes and accordingly has not been subject to U.S.

federal or state income tax.

After the IPO, TWFG Holding continues to be treated as a partnership for U.S.

federal and state income tax purposes.

TWFG Holding is treated as a pass-through entity for U.S.

federal and certain state income tax purposes and accordingly has not been subject to U.S.

federal or applicable state income tax.

Accordingly, because of our ownership of the LLC Units, we are subject to U.S.

federal, state and local income taxes with respect to our allocable share of any net taxable income of TWFG Holding and are taxed at the U.S.

federal, state and local income taxes with respect to our

allocable share of any net taxable income of TWFG Holding and are taxed at the U.S.

federal income tax rates applicable to corporations.

In addition to tax expenses, we also incur expenses related to our operations and we are required to make payments under the Tax Receivable Agreement.

We intend to cause TWFG Holding to make distributions in an amount sufficient to allow us to pay our tax obligations and operating expenses, including distributions to fund any ordinary course payments due under the Tax Receivable Agreement.

In connection with our organizational structure, we entered into the Tax Receivable Agreement with certain pre-IPO owners.

The Tax Receivable Agreement provides for the payment by the Company of a portion of the tax benefits realized as a result of increases in tax basis and other tax attributes resulting from exchanges of LLC units for shares of Class A Common Stock.

No amounts are payable under the TRA, and no related liability is recorded, unless and until such exchanges occur.

As of December 31, 2025, no exchanges had occurred, and accordingly, the Tax Receivable Agreement had no impact on our consolidated financial statements.

Certain income statement line items

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Our commissions are established by the agency agreement between the Company and the insurance carrier and are calculated as a percentage of premiums for the underlying insurance contract.

Commission rates vary across insurance carriers, states and lines of business and typically rang e from 7% to 22%.

Commission rates vary across insurance carriers, states and lines of business and typically range from 7% to 30%.

Our average commission rate for 2025 was approximately 12.8%.

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We may earn contingent income from insurance carriers.

Contingent income is highly variable and based primarily on underwriting results and, to a lesser extent, volume.

Contingent income is highly variable and based primarily on underwriting results and, to a lesser extent, volume placed with the carrier.

Fee income is comprised primarily of policy fees, branch fees, license fees and third-party administrator (“TPA”) fees.

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Other income.

Other income is comprised primarily of interest income on fiduciary funds, income earned for facilitating premium financing arrangements, fees assessed for agent conventions and other miscellaneous income.

Other income is comprised primarily of income earned for facilitating premium financing arrangements, fees assessed for agent conventions, interest income on fiduciary funds, and other miscellaneous income.

The following table sets forth our revenues by amount and as a percentage of our revenues for the periods indicated (dollar amounts in thousands):

Years Ended December 31,

2024 2023 2022

Amount % of Total Amount % of Total Amount % of Total

Amount % of Total Amount % of Total

Commission income

$ 220,968 89 % $ 183,158 90 %

Contingent income

Fee income 10,562 5 8,311 5 8,296 5

Other income 1,318 1 968 1 1,471 1

13,111 5 8,722 4

12,992 5 10,562 5

1,441 1 1,318 1

Total revenues

$ 248,512 100 % $ 203,760 100 %

Commission expense.

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Other administrative expenses.

Other administrative expenses include technology costs, legal and professional fees, office expenses, marketing expense, survey expenses and other costs associated with our operations.

Other administrative expenses include technology costs, legal and professional fees, office expenses, marketing expenses, survey expenses and other costs associated with our operations.

Fluctuations in other administrative expenses are relative to the overall scale of our business operations.

Depreciation and amortization.

Depreciation and amortization are primarily comprised of the amortization of intangible assets recognized from our strategic asset acquisitions.

As we continue to pursue strategic asset acquisitions, we expect our amortization expenses to increase.

Depreciation and amortization are primarily comprised of the amortization of finite-lived intangible assets recognized from our strategic asset acquisitions.

As we continue to pursue strategic asset acquisitions, we expect our amortization expense to increase.

Interest expense.

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Interest income consists of interest earned on the Company’s cash and cash equivalents which are not held in a fiduciary capacity.

Other non-operating income (expense), net.

Other non-operating income (expense), net consists of gains and losses on the sale of assets.

Consolidated results of operations

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Years Ended December 31,

2024 2023 2022

Amount % of Total Amount % of Total Amount % of Total

Amount % of Total Amount % of Total

Commission income

$ 220,968 89 % $ 183,158 90 %

Contingent income

Fee income 10,562 5 8,311 5 8,296 5

Other income 1,318 1 968 1 1,471 1

13,111 5 8,722 4

12,992 5 10,562 5

1,441 1 1,318 1

Total revenues

248,512 100 % 203,760 100 %

Operating expenses:

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Income tax expense 3,279 1,495

Net income from continuing operations

$ 41,166 $ 28,592

Net income (loss) from discontinued operation, net of tax

— 834 (2,733)

$ 28,592 $ 26,096 $ 20,614

Comparison of the Years Ended December 31, 2025 and 2024

Total revenues

Subsequent to issuing the Company’s earnings release on February 25, 2026, the Company received additional information from certain insurance carrier partners related to contingent commission programs associated with 2025 underwriting performance.

Based on this information, the Company recorded an adjustment of approximately $1.4 million to increase commission revenue for the year ended December 31, 2025.

The financial results included in this Annual Report reflect this adjustment.

The Company’s previously issued earnings release for the year ended December 31, 2025 did not reflect this adjustment.

The following table presents the disaggregation of our revenues by offerings (in thousands):

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Total Insurance Services 196,061 79 168,533 82

168,533 82 139,223 81

TWFG MGA 50,763 20 33,719 17

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Total revenues $ 248,512 100 % $ 203,760 100 %

$ 203,760 100 % $ 172,043 100 %

Total revenues for the year ended December 31, 2024 increased by $31.7 million, or 18.4%, compared to the same period in the prior year.

The increase of 18.4% was primarily due to commission income, representing 77.2% of the total growth, contingent income, representing 14.6% of the total growth, fee income, representing 7.1% of the total growth and other income, representing 1.1% of the total growth.

Total revenues fo r the year ended December 31, 2025 increased by $44.8 million, or 22%, compared to the same period in the prior year.

The increase was primarily due to a $37.8 million, or 21% increase in commission income driven primarily by continued organic business growth and the impact of acquisitions in 2025.

Also contributing to the increase in total revenues were $4.4 million, or 50%, increase in contingent income, $2.4 million, or 23%, increase in fee income, and $0.1 million, or 9%, increase in other income, compared to the same period in the prior year.

See discussions below for additional information about the changes in our revenues.

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Total Insurance Services 179,499 81 156,119 85

156,119 85 133,125 84

TWFG MGA 41,469 19 27,039 15

Total commission income $ 220,968 100 % $ 183,158 100 %

$ 183,158 100 % $ 158,679 100 %

Commission income for the year ended December 31, 2024 increased by $24.5 million, or 15.4%, compared to the same period in the prior year.

The increase was primarily due to higher premium rates, new business growth and continued rollout of commission income from our Book of Business acquisitions completed in 2023 into the current period.

See “—Key Performance Indicators—Total Written Premium” for additional information related to our written premiums.

Commission income for the year ended December 31, 2025 increased b y $37.8 million , or 21% , compared to the same period in the prior year due to the continued organic business growth and the impact of acquisitions made in 2025.

Commission income for Insurance Services grew by $23.4 million, or 15%, for the year ended December 31, 2025 compared to the same period in the prior year.

However, during the current period the components shifted between Agency-in-a-Box and Corporate Branches.

Agency-in-a-Box commission income for the year ended December 31, 2024 decreased by $3.8 million, or 3.0%, compared to the same period in the prior year.

The decrease was primarily attributable to the acquisition of the assets of nine of our independent branches (which were previously operated as Agencies-in-a-Box) and their conversion to Corporate Branches in January 2024.

The branch conversions resulted in a $18.3 million decrease in the Agency-in-a-Box commission income for the year ended December 31, 2024.

Insurance Services Corporate Branches commission income for the year ended December 31, 2024 increased by $26.8 million, or 402.7%, compared to the same period in the prior year.

The increase was primarily driven by the branch conversions as previously described.

In addition, Corporate Branches commission income for year ended December 31, 2024 included the full period increases from the Book of Business acquisitions in 2023, while the same period in the prior year reflected partial period increases.

Insurance Service Agency-in-a-Box commission income for the year ended December 31, 2025 increased by $15.3 million , or 12% , compared to the same period in the prior year.

The increase was driven by written premium volume, mix in line of business, and acquisitions during the year.

Insurance Services Corporate Branches commission income for the year ended December 31, 2025 increased by $8.1 million, or 24%, compared to the sa me period in the prior year.

The increase was primarily driven by

$5.7 million of Corporate Branch acquisitions and $2.4 million of Organic Revenue Growth during the year ended December 31, 2025.

TWFG MGA commission income for the year ended December 31, 2025 increased by $14.4 million , or 53% , compared to the same period in the prior year.

An increase of $3.9 million, or 18.4%, was due to higher new business written premiums in our TWFG MGA offering driven by market activities, which created opportunities for us to gain new business.

The increase was offset by a decrease of $2.4 million, or 54.7%, due to the amendment to the MGA agreement with one of our insurance carriers which shifted our volume-based commission to a flat monthly fee, effective January 1, 2024.

This amendment capped the income we earned at a maximum monthly amount.

The increase in commission income w as primarily driven by $12.0 million generated from the acquisition of TWFG MGA FL while the remaining $2.4 million inc rease was due to increases in written premium and commission rate increases of The Woodlands Insurance Company compared to the same period in the prior year.

Contingent income

Contingent income for the year ended December 31, 2025 increased by $4.4 million, or 50%, to $13.1 million from $8.7 million in the same period in the prior year.

The increase in contingent income was driven by underlying carrier profitability and growth in our business.

Changes in contingent income are unpredictable and dependent upon the target financial and performance metrics established by the insurance carriers.

The increase in contingent income was driven by underlying carrier profitability, new carriers to our portfolio and growth in our business.

Contingent income is unpredictable and dependent upon the target financial and performance metrics established by the insurance carriers.

The following table presents the disaggregation of our fee income by major sources (in thousands):

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Total fee income $ 12,992 100 % $ 10,562 100 %

$ 10,562 100 % $ 8,311 100 %

Fee income for the year ended December 31, 2025 increased $2.4 million, or 23% , compared to the same period in the prior year.

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• Policy fees for the year ended December 31, 2025 increased by $0.9 million, or 24% , compared to the same period in the prior year.

The increase in policy fees was primarily due to higher policy count in our TWFG MGA offering and new business growth through our marketing activities.

The increase in policy fees was primarily due to higher policy count and new business growth.

• Branch fees for the year ended December 31, 2025 increased by $0.5 million , or 11%, compared to the same period in the prior year .

The increase in branch fees was primarily due to increased branch fee rates and the impact to our owners of the distribution of our equity interest in Evolution Agency Management LLC (“EVO”) in May 2023.

Branch fees earned for the year ended December 31, 2023 included the elimination of fees paid to EVO for the first four months of 2023, while the current period did not have an impact.

• License fees for the year ended December 31, 2024 decreased by $0.8 million, or 29.7%, compared to the same period in the prior year.

The decrease in license fees was primarily due to the previously discussed distribution of EVO equity interests and the amendment to the licensing agreement.

License fees earned for the current period excluded revenues from EVO’s operation, while license fees earned for the prior period included four months of EVO’s revenues.

In addition, the amendment to the licensing agreement with one of our customers changed from usage-based fees to fixed monthly fees, which capped the fees we earned at a maximum monthly amount.

• TPA fees for the year ended December 31, 2024 decreased by $0.1 million, or 26.4%, compared to the same period in the prior year.

The decrease in TPA fees was primarily due to a lower level of TPA services provided by the Company for the year ended December 31, 2024 compared to the same period in the prior year.

Other income for the year ended December 31, 2024 was $1.3 million, compared to $1.0 million in the same period in the prior year, reflecting an increase of $0.3 million, or 36.2%.

The increase in branch fees was primarily driven by increased agent count of the business.

• License fees for the year ended December 31, 2025 increased by $0.8 million , or 43%, compared to the same period in the prior year.

The increase was primarily driven by a one-time technology infrastructure project completed during the current year to support an affiliated entity’s expansion into a new market.

This item is non-recurring and not expected to have a continuing impact on future operating results.

• TPA fees for the year ended December 31, 2025 increased by $0.2 million , or 54%, compared to the same period in the prior year.

The increase in TPA fees resulted from the increased volume in claims processed.

Other income for the year ended December 31, 2025 was $1.4 million , compared to $1.3 million in the same period in the prior year.

The increase was primarily comprised of interest earned on fiduciary funds and premium financing income.

Commission expense

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Total Insurance Services 113,120 85 100,285 85

100,285 85 100,595 86

TWFG MGA 20,295 15 17,716 15

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$ 133,518 100 % $ 118,086 100 %

Commission expense for the year ended December 31, 2024 increased by $1.2 million, or 1.1%, compared to the same period in the prior year.

The increase was primarily due to an increase in our TWFG MGA offering of $1.5 million, or 1.3%, of the total increase, offset by the lower commission expenses in Insurance Services of $0.3 million, or 0.3%, driven by the previously discussed branch conversions.

Total commission expense for the year ended December 31, 2025 increased by $15.4 million, or 13%, compared to the same period in the pr ior year.

The increase was primarily due to business growth and overall shift in business mix.

See commission income discussion above for additional information regarding the driver of change.

Insurance Services Agency-in-a-Box commission expense for the year ended December 31, 2024 decreased by $4.0 million, or 4.0%, compared to the same period in the prior year.

The decrease was primarily due to the branch conversions resulting in a decrease of $14.7 million, and the one-time favorable accrual adjustment related to the converted branches of $1.5 million, offset by an increase in commission expense related to the growth of the business of $12.2 million.

In January 2024, nine of our Agency-in-a-Box Branches converted to Corporate Branches.

Upon conversion, agents of the newly converted Corporate Branches became employees and received salaries, employee benefits, and bonuses for services rendered instead of commissions.

As result, we released a portion of the unpaid commissions related to the converted branches that we no longer are required to settle, which resulted in the aforementioned one-time favorable accrual adjustment.

Commission expense for total Insurance Services grew by $12.8 million, or 13%, for the year ended December 31, 2025 compared to the same period in the prior year.

Insurance Services Agency-in-a-Box commission expense for the year ended December 31, 2025 increased by $12.0 million, or 13%, compared to the same period in the prior year.

Th e increase was primarily due to the growth in business, consistent with commission income and the absence of a one-time favorable adjustment of $1.5 million in 2024.

The expenses of our Branches are primarily commission expense, which is determined as a percentage of commission income.

Insurance Services Corporate Branches commission expense for the year ended December 31, 2025 increased by $0.8 million, or 19%, compared to the same period in the prior year.

The increase was primarily due to the branch conversions, as previously discussed, and the full year impact of the Book of Business acquisitions in 2023.

The increase i n commission expense was driven by both organic business growth and acquisitions of Corporate Branches in the current period.

The expenses of our Corporate Branches are primarily salaries and benefits, and are primarily fixed expenses, which are not directly correlated to commission income or written premium.

TWFG MGA commission expense for the year ended December 31, 2025 increased by $2.6 million, or 15%, compared to the same period in the prior year.

The increase was primarily due to higher new business written premiums as previously discussed.

The higher percentage increase in TWFG MGA commission expense compared to the percentage decrease in related commission income was primarily driven by the shift in the business mix.

As discussed above, TWFG MGA commission income was impacted by the renegotiation of the MGA agreement with one of our insurance carriers.

This renegotiation reduced commission income in the current period, but did not result in a corresponding reduction in commission expense.

The increase was primarily driven by the acquisition of TWFG MGA FL and geographical expansion of The Woodlands Insurance Company.

Salaries and employee benefits

Salaries and employee benefits for the year ended December 31, 2025 was $37.6 million, compared to $29.1 million in the same period in the prior year, reflecting an increase of $8.6 million, or 29%.

This increase was primarily attributable to the branch conversions contributing an increase of approximately $8.6 million, a $3.7 million increase from the asset acquisitions in 2023, a $2.2 million increase in stock-based compensation from the granting of restricted stock units in July 2024 and a $1.1 million increase due to our continued growth and new roles created in conjunction with our IPO.

Partially offsetting these increases was a decrease driven by the distribution of our equity interest in EVO in May 2023 to our owners.

Salaries and employee benefits for the year ended December 2023 included approximately $0.5 million compensation attributable to EVO’s operations, while in the same period in 2024 we did not incur this compensation.

This increase was primarily attributable to stock-based compensation of $2.4 million, Corporate Branch acquisitions of $3.5 million, and $2.7 million due to personnel increases to support agent growth, corporate branch integration, technology initiatives, and compliance requirements associated with being a public company.

Other administrative expenses

Other administrative expenses for the year ended December 31, 2025 was $22.0 million, compared to $16.7 million in the same period in the prior year, reflecting an increase of $5.4 million, or 32% .

This increase was primarily attributable to a $1.5 million increase in IT costs, a $2.0 million increase in consultant and professional fees, a $1.0 million increase in inspection fees, and a $1.2 million increase in other expenses.

The increase in our IT costs was primarily due to additional cloud computing costs, and 2024 included fees paid to EVO, while in 2023, fees paid to EVO were eliminated upon consolidation.

The increase in our inspection fees was driven primarily by the increased business in our MGA offering.

The increase in consultant and professional fees was primarily attributable to the increased ongoing costs of becoming and being a public company.

The increase in other expenses was due primarily to higher rent and office expenses driven by our Book of Business acquisitions in 2023 and branch conversions in 2024, partially offset by a reduction in administrative expenses related to the previously discussed distribution of our equity interest in EVO.

The increase was primarily due to $1.7 million of information technology expenses, $0.6 million of rent, $0.6 million of professional fees, $0.5 million of insurance expense, and $1.9 million of other administrative expenses, all due primarily to business growth and increased costs as a public company.

Depreciation and amortization

Depreciation and amortization for the year ended December 31, 2025 was $18.3 million compared to $12.0 million in the same period in the prior year, reflecting an increase of $6.3 million, or 53%.

This increase was primarily attributable to the amortization of intangible assets from our recent intangible asset acquisitions and branch conversions.

This increase was primarily attributable to the amortization of intangible assets from our recent intangible asset acquisitions.

Interest expense

Interest expense for the year ended December 31, 2024 was $2.2 million, compared to $1.0 million in the same period in the prior year, reflecting an increase of $1.2 million, or 121.6%.

The increase in interest expense was driven by the increase in our total borrowings under our debt agreements.

In 2023, we increased our borrowings to fund our asset acquisitions in 2023 and branch conversions in 2024.

The increase was also partially offset by the repayment of the outstanding balances under the Term Loan B as defined in the section - “ Liquidity and capital resources ” and the Revolving Facility in July 2024 and August 2024, respectively.

Interest expense for the year ended December 31, 2025 decreased to $0.3 million compared to $2.2 million in the same period in the prior year, due to the repayment of the Revolving Facility (as defined in the section “ Liquidity and capital resources ”) during August 2024.

Interest income

Interest income for the year ended December 31, 2024 was $4.4 million, compared to $0.9 million in the same period in the prior year, reflecting an increase of $3.5 million, or 391.4%.

The increase was primarily attributable to interest earned on the IPO funds and operating cash funds of $195.8 million.

Interest income for the year ended December 31, 2025 increased to $6.6 million, compared to $4.4 million in the same period in the prior year, due to the increase in cash on hand for the full fiscal year 2025 related to IPO proceeds received on July 19, 2024.

Income tax expense

Income tax expense for the year ended December 31, 2024 was $1.5 million compared to zero in the same period in the prior year as after consummation of the Reorganization Transactions and IPO, the Company became subject to U.S.

Income tax expense for the year ended December 31, 2025 was $3.3 million compared to $1.5 million in the same period in the prior year as after consummation of the Reorganization Transactions and IPO, the Company became subject to U.S.

federal, state, and local income taxes with respect to its allocable share of taxable income of TWFG Holding assessed at the prevailing corporate tax rates.

Comparison of the Years Ended December 31, 2023 and 2022

Total revenues

The following table presents the disaggregation of our revenues by offerings (in thousands):

Years Ended December 31,

Amount % of Total Amount % of Total

Insurance Services

Agency-in-a-Box $ 132,350 77 % $ 118,754 77 %

Corporate Branches 6,873 4 3,155 2

Total Insurance Services 139,223 81 121,909 79

TWFG MGA 31,184 18 30,298 20

Other 1,636 1 1,668 1

Total revenues

$ 172,043 100 % $ 153,875 100 %

Total revenues for the year ended December 31, 2023 increased by $18.2 million , or 11.8% , compared to the same period in the prior year.

The increase was primarily due to a $19.2 million , or 13.8% , increase in commission income driven primarily by organic growth and Book of Business acquisitions.

These increases were partially offset by the unearned commission chargebacks in 2023 from insurance carrier insolvencies in 2022, and a $0.5 million, or 11.6%, decrease in contingent income.

The decrease in contingent income was driven primarily by the insurance carriers’ higher loss ratio trends in 2023.

Contingent income is unpredictable and may increase or decrease from one period to the next depending on target financial and performance metrics established by the insurance carriers.

See discussions below for additional information about the changes in our Revenues.

Commission income

The following table presents the disaggregation of our commission income by offerings (in thousands):

Years Ended December 31,

Amount % of Total Amount % of Total

Insurance Services

Agency-in-a-Box $ 126,467 80 % $ 112,975 81 %

Corporate Branches 6,658 4 2,208 2

Total Insurance Services 133,125 84 115,183 83

TWFG MGA 25,554 16 24,305 17

Total commission income

$ 158,679 100 % $ 139,488 100 %

Commission income in 2023 increased by $19.2 million , or 13.8% , compared to 2022, primarily due to continued growth across our offerings.

Higher premium rates combined with a growing Book of Business drove the increase in our Insurance Services offering.

The Book of Business’s growth was primarily due to the organic growth across Insurance Services and the recent Book of Business acquisitions as reflected under Corporate Branches.

These increases in Insurance Services were partially offset by decreases driven primarily by the reduction in commission rates with certain insurance carriers and the unearned commission chargebacks in 2023 from insurance carrier insolvencies in 2022.

The increase in our TWFG MGA offering was driven primarily by higher premium rates, partially offset by a 1% reduction in policy retention, non-renewal of 715 wind policies and 118 coastal policies for a total $1.8 million loss in Total Written Premium where policies were deemed ineligible for renewal business in catastrophe locations, and certain insurance carriers not accepting new business in locations that have experienced catastrophes.

Some of these markets that had experienced catastrophes and in which insurance carriers were not accepting new business in 2023 have since reopened as some existing carriers are now accepting new business in these areas and new carriers have also entered some of these markets.

See “Key Performance Indicators” below for additional information related to our premium retention.

The rising trend in premium rates over the recent years had a favorable impact on commission income across our offerings, partially offset by the reduction in commission rates with certain insurance carriers.

Contingent income

Contingent income for the year ended December 31, 2023 decreased by $0.5 million , or 11.6% , to $4.1 million in 2023 from $4.6 million in the same period in the prior year.

The decrease in contingent income was driven primarily by the insurance carriers’ higher loss ratio trends in 2023.

Changes in contingent income are unpredictable and dependent upon the target financial and performance metrics established by the insurance carriers.

The following table presents the disaggregation of our fee income by major sources (in thousands):

Years Ended December 31,

Amount % of Total Amount % of Total

Policy fees $ 2,100 25 % $ 2,600 31 %

Branch fees 2,982 36 1,661 20

License fees 2,695 33 3,486 42

TPA fees 534 6 549 7

Total fee income

$ 8,311 100 % $ 8,296 100 %

Fee income for the year ended December 31, 2023 was comparable to the same period in the prior year.

Changes to individual components of fee income are discussed in detail below:

Policy fees for the year ended December 31, 2023 decreased by $0.5 million , or 19.2% , in 2023 compared to the same period in the prior year, primarily due to lower policy counts in our TWFG MGA offering in 2023 compared to 2022.

Policy counts declined due to lower retention rates and certain insurance carriers not accepting new business in locations that have experienced catastrophes.

Branch fees increased for the year ended December 31, 2023 by $1.3 million , or 79.5% , in 2023 compared to the same period in the prior year, primarily due to the additional Branches in 2023, coupled with increased services provided to our existing Branches to support their continued growth.

License fees decreased for the year ended December 31, 2023 by $0.8 million , or 22.7% , in 2023 compared to the same period in the prior year, primarily due to the impact of the reorganization of our corporate structure.

In May 2023, we distributed all of our equity interests in EVO to our owners.

As a result, license fees earned in 2023 included only four months of revenues from EVO’s operation compared to a full year's revenues in 2022.

TPA fees for the year ended December 31, 2023 were comparable to the same period in the prior year.

Other income for the year ended December 31, 2023 was $1.0 million , compared to $1.5 million in the same period in the prior year, reflecting a decrease of $0.5 million , or 34.2% .

This decrease was primarily due to lower gains on the sale of Books of Business.

For the year ended December 31, 2023, Other income included $0.1 million of gains on the sale of Books of Business compared to $0.9 million of gains realized in the same period in the prior year.

The decrease was offset by other immaterial increases of $0.3 million for the year ended December 31, 2023.

Commission expense

The following table presents the disaggregation of our commission expense by offerings (in thousands):

Years Ended December 31,

Amount % of Total Amount % of Total

Insurance Services

Agency-in-a-Box $ 99,823 85 % $ 89,480 85 %

Corporate Branches 772 1 91 —

Total Insurance Services 100,595 86 89,571 85

TWFG MGA 16,191 14 15,295 15

Other 61 — 45 —

Total commission expense

$ 116,847 100 % $ 104,911 100 %

Commission expense for the year ended December 31, 2023 increased by $11.9 million , or 11.4% , compared to the same period in the prior year.

This increase was primarily attributable to the continued growth across our offerings, coupled with increases from our recent Book of Business acquisitions as reflected under our Corporate Branches offering.

The increase in commission expense is in line with the increase in our commission income.

See commission income discussion above for additional information regarding the driver of increases.

Salaries and employee benefits

Salaries and employee benefits for the year ended December 31, 2023 was $14.0 million , compared to $12.2 million in the same period in the prior year, reflecting an increase of $1.7 million , or 14.1% .

This increase was primarily attributable to higher headcount to support the continued growth in business, acquisitions and new hires in preparation of becoming a public company.

Other administrative expenses

Other administrative expenses for the year ended December 31, 2023 was $11.0 million , compared to $9.7 million in the same period in the prior year, reflecting an increase of $1.3 million , or 13.1% .

This increase was primarily attributable to increases in marketing expenses of $0.3 million and office overhead of $0.2 million driven primarily by continued growth in our business.

Our insurance premium also increased by $0.3 million primarily due to the increased E&O coverage driven by our continued growth.

Depreciation and amortization

Depreciation and amortization for the year ended December 31, 2023 was $4.9 million , compared to $3.3 million in the same period in the prior year, reflecting an increase of $1.6 million , or 47.2% .

This increase was primarily attributable to the amortization of intangible assets from our recent intangible asset acquisitions.

Interest expense

Interest expense for the year ended December 31, 2023 was $1.0 million, compared to $0.4 million in the same period in the prior year, reflecting an increase of $0.6 million, or 152.0%.

The increase in interest expense was driven by the increase in our total borrowings under our debt agreements.

In 2023, we increased our borrowings to fund our asset acquisitions in 2023.

Interest income

Interest income for the year ended December 31, 2023 was $0.9 million, compared to $0.05 million in the same period in the prior year, reflecting an increase of $0.8 million, or 1,835.9%.

The increase was primarily attributable to an increase in interest rates.

Other non-operating income (expense), net

Other non-operating income (expense), net for the year ended December 31, 2025 increased by $1.1 million compared to the same period in the prior year due to selling of Books of Business.

Key Performance Indicators

Total Written Premium

Total Written Premium represents the total value of insurance policies placed through our platform and is an operating metric used by management to evaluate growth in our distribution activity.

Total Written Premium does not represent revenue recognized by the Company.

Revenue is primarily derived from commissions and fees earned from insurance carriers, which represent a percentage of premium and vary by carrier, product type and services provided.

Accordingly, changes in Total Written Premium may not correspond directly to changes in reported revenue or commission rates from period to period.

Total Written Premium represents, for any reported period, the total amount of current premium (net of cancellations) placed with insurance carriers.

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Years Ended December 31,

2024 2023 2022

Amount % of Total Amount % of Total Amount % of Total

Amount % of Total Amount % of Total

Insurance Services

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Total written premium $ 1,732,430 100 % $ 1,476,360 100 %

The following table presents the dollar and percent change compared to the prior year for Total Written Premium by offerings and business mix (in thousands):

Years Ended December 31,

$ Change % Change $ Change % Change

Insurance Services

Agency-in-a-Box $ 136,721 14 % $ (16,123) (2) %

Corporate Branches 68,591 25 221,368 410

TWFG MGA 50,758 23 23,020 12

Total change in written premium $ 256,070 17 % $ 228,265 18 %

Business Mix:

Insurance Services

Renewal business $ 166,824 17 % $ 148,545 18 %

New business $ 38,488 14 % $ 56,700 25 %

Renewal business $ 19,072 12 % $ (2,243) (1) %

New business $ 31,686 57 % $ 25,263 85 %

Consolidated Business Mix:

Consolidated renewal business $ 185,896 13 % $ 146,302 12 %

Consolidated new business 70,174 5 81,963 7

Total change in written premium $ 256,070 17 % $ 228,265 18 %

Comparison of the Years Ended December 31, 2025 and 2024

Total Written Premium for the year ended December 31, 2024 increased by $228.3 million, or 18.3%, compared to the same period in the prior year.

Drivers of the increase in our Insurance Services offering are attributable to higher premium rates, written premiums from our 2023 acquisitions rolling into the current period, and new business growth.

This increase was offset by a decline in retention as some carriers opened up for new business after a period of restricting capacity, which had the effect in the prior year of increasing retention and slowing new business growth.

As previously discussed, in January 2024, the branch conversions shifted approximately $172.4 million of written premiums for the year ended December 31, 2024 from Agency-in-a-Box to Corporate Branches.

The increase in our TWFG MGA offering was primarily attributable to new business growth and higher premium rates, partially offset by lower premium retention as carriers have opened up for new business which allows consumers and agents to find favorable pricing for our Clients.

Total Written Premium for the year ended December 31, 2025 increased by $256.1 million, or 17%, compared to $228.3 million, or 18%, growth in the same period in the prior year.

Within our Insurance Services offering, renewal business grew $166.8 million, or 17%, as compared to $148.5 million, or 18%, growth in the prior year period.

As a large independent carrier entered the market in late 2024, we saw an influx of $53.1 million moving from other carriers which resulted in a lower premium base, however provided the ability to renew and retain customer premium.

New business grew $38.5 million, or 14%, as compared to $56.7 million, or 25%, growth in the same period of the prior year due to the softening of the market in 2024.

Within our MGA offering, we saw an uptick in renewal business growth of $19.1 million, or 12%, as well as new business growth of $31.7 million, or 57%, over the prior year period due mainly to the MGA FL acquisition.

For the years ended December 31, 2025 and 2024, our consolidated written premium retention was 90% and 91%, respectively.

For the year ended December 31, 2024, the composition of our renewal and new business mix shifted under our two product offerings as follows:

For the year ended December 31, 2025, the composition of our renewal and new business under our two product offerings are as follows:

Insurance Services renewal business, as a percentage of the total written premium, was 66% which was consistent with the prior year and premium retention decreased to 91% from 93%, resulting in renewal premium growth of 17%, or $166.8 million, compared to 2024.

Insurance Services new business, as a percentage of total written premium, increased to 19.0% from 18.0%, resulting in a new business growth of 25.1%, or $56.7 million, compared to 2023.

The shift in Insurance Services new and renewal business reflects more carriers seeking new business growth after a period of retrenchment designed to restore carrier profitability.

As carriers seek to grow after a period of reducing capacity by raising rates and slowing new business growth, consumers and their agents have more choices in terms of carriers and coverage.

TWFG MGA renewal business, as a percentage of the total written premium, decreased to 11% compared to 13% in 2023 .

As a result, premium retention decreased to 84% from 89%, resulting in a decrease in renewal business of 1.4%, or $2.2 million, compared to 2023 .

TWFG MGA new business, as a percentage of total written premium, increased to 4% from 3%, resulting in a new business growth of 84.6%, or $25.3 million, compared to 2023 .

The shift in TWFG MGA new and renewal business reflects more carriers seeking new business growth after a period of retrenchment designed to restore carrier profitability.

Comparison of the Years Ended December 31, 2023 and 2022

For the year ended December 31, 2023, we had $1,248.1 million in Total Written Premium compared to $1,054.5 million for the year ended December 31, 2022, reflecting an 18.4% growth compared to the prior year.

Higher premium rates combined with a growing Book of Business drove the increase in our Insurance Services offering.

The Book of Business's growth was primarily due to the organic growth across Insurance Services and the recent Book of Business acquisitions as reflected under Corporate Branches.

The increase in our TWFG MGA offering was driven primarily by higher premium rates, partially offset by reduced policy retention, non-renewal of business in catastrophe locations, and certain insurance carriers not accepting new business in locations that have experienced catastrophes.

Written premiums across our offerings benefited from the rising trend in premium rates over the recent years.

For the year ended December 31, 2023, our consolidated written premium retention was 94% compared to 88% for the year ended December 31, 2022.

The increase was primarily due to higher premium rates and growing Books of Business, partially offset by non-renewal of catastrophe exposed programs.

Insurance Services new business, as a percentage of total written premium, was 19%, consistent with prior year, resulting in new business growth of 14%, or $38.5 million.

TWFG MGA renewal and new business as a percentage of written premium was 11% and 4% for the years ended December 31, 2025 and 2024.

Non-GAAP Financial Measures

Organic Revenue.

Organic Revenue is total revenues (the most directly comparable GAAP measure) for the relevant period, excluding contingent income, fee income, other income and those revenues generated from acquired books of business with over $0.5 million in annualized revenue that have not reached the twelve-month owned milestone.

Since the first quarter of 2025, we have utilized the revised calculation methodology for Organic Revenue to include policy fee income as it is directly correlated to MGA commission income.

Our legacy calculation methodology removed policy fee income from Organic Revenue.

Organic Revenue is total revenue (the most directly comparable GAAP measure) for the relevant period, excluding contingent income, non-policy fee

income, other income and those revenues generated from acquired businesses with over $0.5 million in annualized revenue that have not reached the twelve-month owned mark.

Organic Revenue Growth.

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A reconciliation of Organic Revenue and Organic Revenue Growth Rate to Total Revenue and Total Revenue Growth Rate, the most directly comparable GAAP measures, for each of the periods indicated is as follows (in thousands):

2024 2023 2022

Revised Calculation Methodology Applied to Current Period

Years Ended December 31,

Total Revenues $ 248,512 $ 203,760

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Other income (1,441) (1,318)

Policy fee income 4,392 3,538

Organic Revenue $ 207,374 $ 183,009

Prior year Organic Revenue reported $ 179,471 $ 154,627

Commission income at 12-month post acquisitions 3,687 2,098

Prior year policy fees 3,538 2,100

Other adjustments (2)

Organic Revenue denominator $ 185,792 $ 158,825

Organic Revenue $ 207,374 $ 183,009

Organic Revenue denominator 185,792 158,825

Organic Revenue Growth $ 21,582 $ 24,184

Total Revenue Growth Rate (3)

22.0 % 18.4 %

Organic Revenue Growth Rate (4)

11.6 % 15.2 %

(1) Represents revenues generated from the acquired businesses during the first 12 months following an acquisition.

(2) Other adjustments reflect immaterial prior-period and comparability items consistent with management’s non-GAAP presentation policy.

(3) Represents the period-to-period change in total revenues divided by the total revenues in the prior period.

(4) Represents Organic Revenue Growth divided by the Organic Revenue denominator.

Legacy Calculation Methodology Applied to Current Period

Years Ended December 31,

Total Revenues $ 248,512 $ 203,760

Acquisition adjustments (1)

(17,986) (3,687)

Contingent income (13,111) (8,722)

Fee income (12,992) (10,562)

Other income (1,441) (1,318)

Organic Revenue $ 202,982 $ 179,471

Prior year Organic Revenue reported $ 179,471 $ 154,627

Commission income at 12-month post acquisitions 3,687 2,098

Other adjustments (2)

Organic Revenue denominator $ 182,254 $ 156,725

Organic Revenue $ 202,982 $ 179,471

Organic Revenue denominator 182,254 156,725

Organic Revenue Growth $ 20,728 $ 22,746

Total Revenue Growth Rate (3)

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(1) Represents revenues generated from the acquired businesses during the first 12 months following an acquisition.

(2) Organic Revenue for the year ended December 31, 2023 and 2022, used to calculate Organic Revenue Growth for the year ended December 31, 2024 and 2023, was $156.7 million and $139.1 million, respectively, which is adjusted to reflect revenues from acquired businesses with over $0.5 million in annualized revenue that reached the twelve-month owned mark during the year ended December 31, 2024 and 2023, respectively.

Organic Revenue Growth Rate represents the period-to-period change in Organic Revenue divided by the total adjusted Organic Revenue in the prior period.

(2) Other adjustments reflect immaterial prior-period and comparability items consistent with management’s non-GAAP presentation policy.

(3) Represents the period-to-period change in total revenues divided by the total revenues in the prior period.

Comparison of the Years Ended December 31, 2024 and 2023

Revenue growth rate, representing the year-over-year change in total revenues, was 18.4% for the year ended December 31, 2024 compared to the same period in 2023 and 11.8% for the year ended December 31, 2023 compared to the same period in 2022.

Revenue growth for both periods reflected the impact of higher premium rates, growing Books of Business and the mix of the new and renewal businesses.

Revenue growth for the year ended December 31, 2024 compared to the same period in 2023 included the impact of the continued rollout of commission income from our Book of Business acquisitions in 2023 into the current period, higher fee income and higher interest income on fiduciary funds.

Organic Revenue Growth Rate was 14.5% for the year ended December 31, 2024 compared to the same period in 2023 and 11.2% for the year ended December 31, 2023 compared to the same period in 2022.

Organic Revenue Growth for both periods reflects ongoing, but normalizing, rate increases being implemented by carriers, the underlying growth of our business, and healthy economic growth.

Effective January 1, 2024, the MGA agreement with one of our insurance carriers was renegotiated and amended, which shifted our volume-based commission to a flat monthly fee.

The amended agreement capped the income we earned at a maximum monthly amount.

In addition, revenue growth and Organic Revenue Growth for the year ended December 31, 2023 compared to the same period in 2022 reflected the impact of enhanced data collected from external sources, which improved our assumptions for estimating revenue starting in 2022.

Applying the use of enhanced data consistently throughout the prior periods, revenue growth rate for the year ended December 31, 2023 compared to the same period in 2022 would have been 14.9%, and Organic Revenue Growth Rate for the year ended December 31, 2023 compared to the same period in 2022 would have been 14.5%.

(4) Represents Organic Revenue Growth divided by the Organic Revenue denominator.

Comparison of the Years Ended December 31, 2025 and 2024

Revenue growth, representing the year-over-year change in total revenues, was 11.8% in 2023 compared to the same period in the prior year and 23.2% in 2022 compared to 2021.

During 2023, several insurance carriers lowered their growth initiatives countrywide to address historically high loss ratios in prior years while aggressively filing rate increases.

This had a negative impact on our new business revenue growth due to carriers limiting new business and restricting capacity.

Further, we revised downward our anticipated

contingent income related to prior years in 2023 based on insurance carriers’ higher loss ratio trends in 2023.

In addition, in California, certain carriers did not renew their property portfolios and/or closed their portfolios to new business, which required policies to be written or re-written through the California Fair Plan, the state-run insurance carrier, which pays a lower commission than traditional carriers.

Finally, insurance carrier insolvencies in 2022 resulted in unearned commission chargebacks in 2023 that negatively impacted our 2023 revenue growth.

Such amounts were partially offset by increased commissions for renewal policies with higher rates.

In addition, revenue growth in 2022 was higher than revenue growth in 2023 due to enhanced data collected from external sources, which improved our assumptions for estimating revenues starting in 2022.

Applying the use of enhanced data consistently throughout the periods presented, revenue growth in 2023 would have been 14.9% compared to 2022, and revenue growth in 2022 would have been 17.4% compared to 2021.

Organic Revenue Growth was 11.2% in 2023 compared to the same period in 2022 and 23.2% in 2022 compared to the same period in 2021.

The decrease in Organic Revenue Growth was primarily due to the above-mentioned factors and excludes the impact of our Books of Business acquisitions and changes to contingent income, fee income, and other income.

Applying the use of enhanced data consistently throughout the periods presented, Organic Revenue Growth in 2023 would have been 14.5% compared to 2022 and Organic Revenue Growth in 2022 would have been 16.9% compared to 2021.

Revenue growth rate, representing the year-over-year change in total revenues, was 22.0% for the year ended December 31, 2025 compared to the 18.4% Revenue growth rate for the year ended December 31, 2024.

Revenue growth for the periods reflected the growth in our Books of Business and the mix of the new and renewal businesses.

Revenue growth for the year ended December 31, 2025 compared to the same period in 2024 included the continued growth of commission and fee income during the period.

Organic Revenue Growth Rate was 11.6% for the year ended December 31, 2025 compared to 15.2% Organic Revenue Growth Rate for the year ended December 31, 2024.

Organic Revenue Growth for both periods reflects ongoing, but normalizing, rate increases being implemented by carriers, the underlying growth of our business, healthy economic growth and an increase in commission income in our MGA offering.

See “Consolidated Results of Operations—Commission Income” for additional discussions regarding the changes in our commission income.

Adjusted Net Income.

Since the second quarter of 2024, we have utilized the revised calculation methodology for Adjusted Net Income, which includes amortization expenses among the add-back adjustments to our net income when calculating our Adjusted Net Income.

Our legacy calculation methodology reflected the impact of intangible asset amortization as a reduction to our Adjusted Net Income.

The revised calculation methodology excludes the effect of the intangible asset amortization when calculating our Adjusted Net Income by reflecting it among the add-back adjustments to our net income.

We believe that the revised calculation of Adjusted Net Income is more consistent with the method and presentation used by most of our peers and will allow management to better evaluate our performance relative to our peer companies.

We believe that the revised calculation more effectively represents what our stakeholders consider useful in assessing our performance.

Adjusted Net Income is a supplemental measure of our performance and is defined as net income (the most directly comparable GAAP measure) before amortization, non-recurring or non-operating income and expenses, including equity-based compensation, adjusted to assume a single class of stock (Class A) and assuming noncontrolling interests do not exist.

Adjusted Net Income is a supplemental measure of our performance and is defined as Net Income (the most directly comparable GAAP measure) before amortization, non-recurring or non-operating income and expenses, including equity-based compensation, adjusted to assume a single class of stock (Class A) and assuming noncontrolling interests do not exist while excluding the impact of the sale of non-current assets.

We believe Adjusted Net Income is a useful measure because it adjusts for the after-tax impact of significant one -time, non-recurring items and eliminates the impact of any transactions that do not directly affect what management considers to be our ongoing operating performance in the period.

These adjustments generally eliminate the effects of certain items that may vary from company-to-company for reasons unrelated to overall operating performance.

Beginning in the year ended December 31, 2025, we updated our definition of Adjusted Net Income to exclude the impact of the sale of non-current assets.

The impact of this change on our Adjusted Net Income for the year ended December 31, 2025, as well as on previously reported periods, was not material.

As a result, prior‑period amounts have not been recast.

We believe this minor refinement to our definition provides improved alignment with how management evaluates operating performance and enhances the measure’s usefulness for investors while maintaining comparability with prior periods.

We are subject to U.S.

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federal income tax purposes.

Post-IPO, the calculation will incorporate the impact of federal and state statutory tax rates on 100% of our adjusted pre-tax income as if the Company owned 100% of TWFG Holding.

Post-IPO, the calculation incorporates the impact of federal and state statutory tax rates on 100% of our adjusted pre-tax income as if the Company owned 100% of TWFG Holding.

Adjusted Net Income Margin .

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A reconciliation of Adjusted Net Income and Adjusted Net Income Margin to Net Income and Net Income Margin, the most directly comparable GAAP measures, for each of the periods indicated is as follows (in thousands):

Revised Calculation Methodology Applied to Current Period

2024 2023 2022

Years Ended December 31,

Total Revenues $ 248,512 $ 203,760

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Acquisition-related expenses

Restructuring and related expenses — 17 —

Discontinued operation income — (834) 2,733

Equity-based compensation

Other non-recurring items (1)

Gain on sale of non-current assets, net (2)

Amortization expense 17,812 11,721

Adjusted income before income taxes 66,018 42,827

42,827 30,077 26,366

Adjusted income tax expense (3)

Adjusted Net Income $ 33,025 $ 30,077 $ 26,366

Net Income Margin 14.0 % 15.2 % 13.4 %

Adjusted Net Income Margin 16.2 % 17.5 % 17.1 %

Legacy Calculation Methodology Applied to Current Period

(15,118) (9,802)

Total revenues

$ 203,760 $ 172,043 $ 153,875

Net income $ 28,592 $ 26,096 $ 20,614

Income tax expense 1,495 — —

Acquisition-related expenses

Restructuring and related expenses

Discontinued operation income — — (834) 2,733

Equity-based compensation

Other non-recurring items (1)

(1,220) — — —

Adjusted income before income taxes 31,106 25,483 23,347

Adjusted income tax expense (2)

Adjusted Net Income $ 50,900 $ 33,025

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Adjusted Net Income Margin 20.5 % 16.2 %

(1) Represents a one-time adjustmen t reducing commission expense, which resulted from the branch conversions.

In January 2024, nine of our Branches converted to Corporate Branches.

(1) For the year ended December 31, 2024 , nine of our Branches converted to Corporate Branches.

Upon conversion , agents of the newly converted Corporate Branches became employees and received salaries, employee benefits, and bonuses for services rendered instead of commissions.

As a result, we released a portion of the unpaid commissions related to the converted branches that we no longer are required to settle.

(2) Post-IPO, we are subject to United States federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of TWFG Holding.

For the year ended December 31, 2024, the calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a blended state income tax rate of 1.88% on 100% of our adjusted income before income taxes as if we owned 100% of the TWFG Holding.

(2) During the second quarter of 2025, a gain related to the sale of non-current assets was not excluded from Adjusted Net Income consistent with the Company’s stated definition.

The presentation has been corrected in the fourth quarter and full-year 2025 results to conform to the Company’s definition of Adjusted Net Income.

This correction impacts only non-GAAP measures and had no effect on previously reported GAAP results.

(3) Post-IPO, we are subject to U.S.

federal income taxes, in addition to state, local, and foreign taxes, with respect to our allocable share of any net taxable income of TWFG Holding.

For the year ended December 31, 2025, the calculation of adjusted income tax expense is based on a federal statutory rate of 21% and a blended state income tax rate of 1.89% on 100% of our adjusted income before income taxes as if we owned 100% of TWFG Holding.

Adjusted Diluted Earnings Per Share.

Adjusted Diluted Earnings Per Share is Adjusted Net Income divided by diluted shares outstanding after adjusting for the effect of (i) the exchange of 100% of the outstanding Class B Common Stock and Class C Common Stock (together with the related LLC Units) into shares of Class A Common

Stock and (ii) the vesting of 100% of the unvested equity awards and exchange into shares of Class A Common Stock.

Adjusted Diluted Earnings Per Share is Adjusted Net Income divided by diluted shares outstanding after adjusting for the effect of (i) the exchange of 100% of the outstanding Class B Common Stock and Class C Common Stock (to gether with the related LLC Units) into shares of Class A Common Stock and (ii) the vesting of 100% of the unvested equity awards and exchange into shares of Class A Common Stock.

This measure does not deduct earnings related to the noncontrolling interests in TWFG Holding for the period of time prior to July 19, 2024 when we did not own 100% of the business.

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A reconciliation of Adjusted Diluted Earnings Per Share to diluted earnings per share, the most directly comparable GAAP measure, for the year ended December 31, 2025 indicated is as follows:

December 31, 2024

Years Ended December 31,

Earnings per share of common stock – diluted $ 0.53 $ 0.19

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Impact of all LLC Units exchanged for Class A Common Stock (1)

41,171,461 41,171,461

Adjusted Diluted Earnings Per Share diluted share count 56,271,651 56,153,870

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For the year ended December 31, 2025, this includes $33.2 million of net income on 56,271,651 weighted-average shares of common stock outstanding - diluted, for the year ended December 31, 2025.

For the year ended December 31, 2024, 41,171,461 weighted average outstanding Class B Common Stock and Class C Common Stock were considered dilutive and included in the 56,153,870 weighted-average shares of common stock outstanding - diluted within diluted earnings per share calculation.

For the year ended December 31, 2025, 41,171,461 weighted average outstanding Class B Common Stock and Class C Common Stock were considered anti-dilutive and included in the 56,271,651 weighted-average shares of common stock outstanding - diluted within diluted earnings per share calculation.

See Note 15, “Earnings Per Share” to our consolidated financial statements included elsewhere in this Annual Report for more information about the earnings per share.

(2) Adjustments to Adjusted Net Income are described in the footnotes of the reconciliation of Adjusted Net Income to Net Income in “Adjusted Net I ncome and Adjusted Net Income Margin”, which represent the difference between Net Income of $28.6 million and Adjusted Net Income of $33.0 million for the year ended December 31, 2024.

For the year ended December 31, 2024, Adjusted Diluted Earnings Per Share include adjustments of $4.4 million to Adjusted Net Income on 14,982,409 weighted-ave rage shares of common stock outstanding - diluted.

(2) Adjustments to Adjusted Net Income are described in the footnotes of the reconciliation of Adjusted Net Income to Net Income in “Adjusted Net Income and Adjusted Net Income Margin”, which represent the difference between Net Income of $41.2 million and Adjusted Net Income of $50.9 million for the year ended December 31, 2025.

For the year ended December 31, 2025, Adjusted Diluted Earnings Per Share include adjustments of $9.7 million to Adjusted Net Income on 56,271,651 weighted-average shares of common stock outstanding - diluted.

Adjusted EBITDA.

Adjusted EBITDA is a supplemental measure of our performance and is defined as EBITDA adjusted to reflect items such as equity-based compensation, interest income, other non-operating and certain nonrecurring items .

EBITDA is defined as net income (the most directly comparable GAAP measure) before interest, income taxes, depreciation and amortization.

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Our measure of Adjusted EBITDA is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation.

Beginning in the year ended December 31, 2025, we updated our definition of Adjusted EBITDA to exclude the impact of the sale of non-current assets.

The impact of this change on our Adjusted EBITDA for the year ended December 31, 2025, as well as on previously reported periods, was not material.

As a result, prior‑period amounts have not been recast.

Adjusted EBITDA Margin .

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A reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to Net income and Net income margin, the most directly comparable GAAP measures, for each of the periods indicated is as follows (in thousands):

2024 2023 2022

Years Ended December 31,

Total Revenues $ 248,512 $ 203,760

Net income $ 28,592 $ 26,096 $ 20,614

$ 41,166 $ 28,592

Interest expense 287 2,223

Interest income (1)

(6,607) (4,376)

Depreciation and amortization 18,353 12,020

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Acquisition-related expenses 292 20

Restructuring and related expenses — 17 —

Equity-based compensation 4,578 2,219

Interest income (1)

Discontinued operation income — (834) 2,733

Gain on sale of non-current assets, net (2)

Other non-recurring items (3)

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Adjusted EBITDA Margin 26.9 % 22.3 %

(1) Interest income reflects interest and other earnings on cash balances held by the Company.

This income is included in Adjusted EBITDA as we view our total interest and investment income as an integral part of our business model and earnings stream until deployed.

(2) During the second quarter of 2025, a gain related to the sale of non-current assets was not excluded from Adjusted EBITDA consistent with the Company’s stated definition.

The presentation has been corrected in the fourth quarter and full-year 2025 results to conform to the Company’s definition of Adjusted EBITDA.

This correction impacts only non-GAAP measures and had no effect on previously reported GAAP results.

(3) Represents one-time adjustments of office relocation cost and the branch conversions impacts.

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As a result, we released a portion of the unpaid commissions related to the converted branches that we no longer are required to settle.

(2) Interest income reflects interest and other earnings on cash balances held by the Company.

This income is included in Adjusted EBITDA as we view our total interest and investment income as an integral part of our business model and earnings stream until deployed.

Adjusted Free Cash Flow.

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We believe Adjusted Free Cash Flow is a useful measure of operating performance because it represents the cash flow from the business that is within our discretion to direct to activities including investments, debt repayment, and returning capital to stockholders.

A reconciliation of Adjusted Free Cash Flows to Cash flow from Operating Activities, the most directly comparable GAAP measures, for each of the periods indicated is as follows (in thousands):

2024 2023 2022

A reconciliation of Adjusted Free Cash Flow to Cash flow from Operating Activities, the most directly comparable GAAP measures, for each of the periods indicated is as follows (in thousands):

Years Ended December 31,

Cash Flow from Operating Activities $ 53,501 $ 40,479

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Acquisition-related expenses

Net cash flow provided by operating activities from discontinued operation — (839) (3,661)

Adjusted Free Cash Flow $ 42,087 $ 28,192

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Liquidity and capital resources

Historical liquidity and capital resources

We have managed our historical liquidity and capital requirements primarily through cash generated from our operations.

Prior to the IPO, our primary cash flow activities involved:

(1) generating cash flow from our operations;

(2) making strategic acquisitions;

(3) making distributions to the Pre-IPO LLC Members;

and (4) making borrowings, interest payments and repayments under our Credit Agreements.

On July 19, 2024, we completed the IPO of 11,000,000 shares of Class A Common Stock at an IPO price of $17.00 per share.

On July 23, 2024, the underwriters purchased an additional 1,650,000 shares of Class A Common Stock in connection with the underwriters’ full exercise of their option to purchase additional shares.

We received approximately $192.9 million of net proceeds from the IPO, including from the full exercise of the underwriters’ option, after deducting underwriting discounts and commissions and related offering expenses.

As of December 31, 2024, and December 31, 2023, our cash and cash equivalents were $195.8 million, and $39.3 million, respectively.

We have used cash flow from operations primarily to pay compensation and related expenses, general, administrative and other expenses, debt service and distributions to our owners.

Historical liquidity context

Our liquidity position and capital resources have evolved over time primarily as a result of organic growth, acquisitions, and financing activities, including the completion of IPO and related reorganization transactions in 2024.

Historical cash flows and financing activities provide context for period-to-period changes in our liquidity;

however, management’s assessment of liquidity and capital resources is focused on our current financial position, expected cash flows from operations, and anticipated capital requirements.

Accordingly, the discussion below emphasizes our liquidity and capital resources as of December 31, 2025 and our ability to meet our obligations and fund our operations for the foreseeable future.

As of December 31, 2025, the Company had $155.9 million in cash and cash equivalents and $12.0 million in restricted cash, compared to $195.8 million and $9.6 million, respectively, as of December 31, 2024.

The decrease in cash and cash equivalents for the year ended December 31, 2025 was primarily attrib utable to $61.9 million of cash paid for acquisitions, $15.9 million in member distributions, $10.0 million in other investments, and $3.1 million in tax withholding on equity vesting, partially offset by positive cash flows from operations of $ 53.5 million.

The Company maintains access to the $50.0 million Revolving Facility, of which zero was outstanding at December 31, 2025, all of which remained available for future borrowings as of December 31, 2025.

We were in compliance with all financial covenants under our debt agreements as of the end of the reporting period.

Management believes existing liquidity sources, together with cash generated from operations, will be sufficient to meet working capital, capital expenditure, and acquisition-related needs for at least the next 12 months.

On February 23, 2026, our Board approved a share repurchase program that authorizes the Company to repurchase up to $50 million of its outstanding Class A common stock.

Share repurchases may be made from time to time on the open market, in privately negotiated transactions, using Rule 10b5-1 trading plans, or in any other manner that complies with the applicable securities law.

The timing of purchases and number of shares repurchased under the program will depend upon a variety of factors including the Company’s stock price, trading volume, working capital or other liquidity requirements, and market conditions.

The Company is not obligated to purchase any shares under the program and the program may be suspended or discontinued at any time without notice.

Credit agreements

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The aggregate principal amounts of the Term Loan C as of December 31, 2025 is $4.0 million as follows (in thousands):

Year ended December 31, 2025 $ 1,912

Year ended December 31, 2026 1,972

Year ended December 31, 2027 2,035

Year ending December 31, 2026

Year ending December 31, 2027

Total $ 4,007

On May 23, 2023, TWFG Holding, the guarantors party thereto, the lenders party thereto, PNC Bank, National Association (the “Agent”) and PNC Capital Markets LLC entered into a credit agreement that provides a revolving credit facility to TWFG Holding, with commitments in an aggregate principal amount not to exceed $50.0 million which was amended on June 20, 2024 (as so amended, the “Revolving Facility,” and together with the Term Loan Credit Agreement, the “Credit Agreements”).

The June 20, 2024 amendment provided for, among other things, certain amendments relating to the IPO.

The Revolving Facility provides for a revolving credit facility to TWFG Holding in an aggregate principal amount not to exceed $50.0 million that matures on May 23, 2028.

The proceeds from borrowings under the Revolving Facility have been used for permitted acquisi tions, and may in the future be used for acquisitions, working capital and general corporate purposes.

On August 5, 2024, we repaid the outstanding balance of the Revolving Facility

amounting to $41.0 million using a portion of the net proceeds from the IPO.

On August 6, 2024, in accordance with the Revolving Facility, we became a guarantor of, and granted a security interest to secure, the Revolving Facility.

TWFG Holding and the guarantors to the Revolving Credit Facility entered into a letter agreement, dated October 3, 2024, with the Agent and the lenders party thereto to make changes relating to the debt covenant calculation.

As of December 31, 2024, there was no outstanding balance under the Revolving Facility.

The Credit Agreements contain covenants that, among other provisions and subject to certain exceptions, restrict our ability to make restricted payments, incur additional debt, engage in asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in transactions with affiliates, change our business or make investments.

We may voluntarily prepay in whole or in part the outstanding principal under our Term Loans at any time prior to the maturity date.

In addition, the Credit Agreements contain financial covenants that require us, subject to certain exceptions, to maintain a Consolidated Debt Service Coverage Ratio (as defined in the Credit Agreement) of at least 1.50 to 1.00 and a Consolidated Leverage Ratio (as defined in the Credit Agreement) of not more than 2.00 to 1.00, in each case, calculated as of the end of each fiscal quarter for the four fiscal quarters then ended, and as of December 31, 2024, we are in compliance with each such covenant.

Pursuant to the Credit Agreements, a change of control default will be t riggered if:

(i) any person or group (other than the Continuing Pre-IPO LLC Members or Richard F.

(“Gordy”) Bunch III and his affiliates) acquires beneficial ownership (within the meaning of Rule 13d-3 and 13d-5 under the Exchange Act) of more than 35% of the total voting power represented by our outstanding voting stock, (ii) we cease to be the managing member of TWFG Holding, (iii) any person (other than us, the Continuing Pre-IPO LLC Members or Richard F.

(“Gordy”) Bunch III and his affiliates) owns more than 35% of the membership interests of TWFG Holding or (iv) TWFG Holding shall cease to own, free and clear of all liens or other encumbrances (other than certain Permitted Liens as defined in our Credit Agreements), 100% of the outstanding voting equity interests of each guarantor (other than us) on a fully diluted basis, except as a result of a merger, consolidation or disposition permitted under the Credit Agreement.

Such a default could result in the acceleration of repayment of our and our subsidiaries’ indebtedness, including borrowings under our Term Loan Credit Agre ement (as defined below) and any amounts then outstanding under the Revolving Facility if not waived by the lenders under our Credit Agreements.

Interest on Term Loan B and Term Loan C accrue at Daily Simple Secured Overnight Financing Rate (“SOFR”) plus the Benchmark Replacement Adjustment of 0.11448%, 0.26161%, or 0.42826% for the one-month, three-month, or six-month borrowing periods, respectively.

The Revolving Credit Agreement (the “Revolving Credit Agreement”) with PNC Bank National Association, dated as of May 23, 2023 and as amended on June 20, 2024, provides a revolving credit facility to the Company, with commitments in an aggregate principal amount not to exceed $50.0 million (as so amended, the “Revolving Facility,” and together with the Term Loan Credit Agreement, the “Credit Agreements”).

Borrowings constituting revolving loans under the Revolving Credit Agreement incur interest at the Term SOFR Rat e (as defined therein) for the applicable interest period plus a margin based on the consolidated leverage ratio of the Company between 2% and 2.75%, and a 0.10% adjustment.

The borrowings under the Revolving Facility may be used by the Company for permitted acquisitions, working capital and general corporate purposes.

The Company pays a commitment fee on unutilized amounts under the Revolving Facility of 0.20% up to 0.35% based on the consolidated leverage ratio.

As of December 31, 2025 and December 31, 2024 , the Revolving Facility had an unutilized capacity of $50.0 million and $50.0 million , respectively.

Each of the Revolving Facility and the term lo ans requires the Company to maintain a consolidated leverage ratio of no greater than 2.00 to 1.00 (or, after the occurrence of certain acquisitions, 2.50 to 1.00).

The Credit Agreements also contain covenants that, among other provisions and subject to certain exceptions, restrict our ability to pay dividends or other distributions, incur additional debt, engage in asset sales, mergers, acquisitions or similar transactions, create liens on assets, engage in transactions with affiliates, change our business or make investments.

As of December 31, 2025 and December 31, 2024, the Company was in compliance with these covenants.

The carrying amount of the Company’s variable rate debt as of December 31, 2025 and December 31, 2024 approximates fair value due to the short-term reset of the interest rate based on SOFR and the absence of a credit spread.

Interest on the Term Loan C accrues at Daily Simple Secured Overnight Financing Rate (“SOFR”) plus the Benchmark Replacement Adjustment of 0.11448%, 0.26161%, or 0.42826% for the one-month, three-month, or six-month borrowing periods, respectively.

At our option, the revolving credit facility under the Revolving Facility accrues interest on amounts drawn at the Term SOFR Rate or Daily SOFR plus the SOFR Adjustment of 0.10% and Applicable Margin of 2.00% to 2.75%, each as defined in the Revolving Facility.

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

2025 2024 Variance

Net cash provided by operating activities from continuing operations $ 53,501 $ 40,479 $ 13,022

Net cash (used in) investing activities from continuing operations (70,378) (25,055) (45,323)

Net cash provided by (used in) financing activities from continuing operations 143,431 1,610

Net cash (used in) provided by financing activities from continuing operations (20,546) 143,431 (163,977)

Net change in cash, cash equivalents and restricted cash from continuing operations (37,423) 158,855 (196,278)

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Cash paid during the period for interest $ 194 $ 2,298 $ (2,104)

Cash paid during the period for taxes $ 3,268 $ — $ 3,268

Comparison of the Years Ended December 31, 2025 and 2024

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Operating activities from continuing operations provided $53.5 million and $40.5 million of cash for the years ended December 31, 2025 and 2024, respectively.

The increase in net cash provided by operating activities from continuing operations was primarily attributable to the $31.7 million increase in total revenues offset by the

increase in commission expense, salaries and employee benefits, other administrative expenses and interest expense amounting to $1.2 million, $15.1 million, $5.7 million, $1.2 million, respectively, and approximately $2.0 million in net outflows from the changes in our net working capital between periods and other individually immaterial increases of $1.3 million of cash inflows.

The increase in net cash provided by operating activities was driven by a $12.6 million increase in net income, $7.4 million outflow from the change in working capital between

periods, which was primarily attributable to timing of receivables and payables, and $7.9 million in net change of non-cash adjustments in the period which include amortization, stock-based compensation, gain on sale of intangibles and non-cash lease expense.

See “—Consolidated Results of Operations” for additional information regarding the results of our operations.

Investing activities

Investing activities from continuing operations used $25.1 million and $14.7 million of cash for the years ended December 31, 2024 and 2023, respectively.

Our net investing outflows increased primarily due to the higher level of intangible asset acquisitions in 2024 of $21.9 million compared to $15.4 million in 2023.

In January 2024, we acquired the assets of nine of our independent branches for a total purchase price of $40.8 million, of which approximately $20.4 million was paid in cash, with the remainder settled through the issuance of Class A common units.

In addition, the Company purchased customer lists intangible assets totaling $1.6 million, of which approximately $0.4 million was paid in cash, for the year ended December 31, 2024 representing purchases of assets with annualized revenues less than $0.5 million.

The prior year included three customer list acquisition transactions representing purchases of assets with annualized revenues greater than $0.5 million.

See Note 4, “Intangible Assets” to our consolidated financial statements included elsewhere in this Annual Report for additional information regarding our asset acquisitions.

Investing activities from continuing operations used $70.4 million and $25.1 million of cash for the years ended December 31, 2025 and 2024 , respect ively.

Our net investing outflows increased primarily due to the higher level of intangible asset acquisitions in 2025 of $61.9 million compared to $21.9 million in 2024, partially offset by $1.8 million inflow from proceeds on the sale of intangible assets and other net decrease in investing outflows of $2.9 million .

In addition, the Company made a $10.0 million other investment held by a third-party to facilitate premium financing arrangements during the period ended December 31, 2025.

See Note 4, “Intangible Assets and Acquisitions” to our consolidated financial statements included elsewhere in this Annual Report for additional information regarding our asset acquisitions.

Financing activities

Financing activities from continuing operations provided $143.4 million and $1.6 million of cash for the years ended December 31, 2024 and 2023, respectively.

Our net financing inflows increased primarily due to $193.6 million in proceeds from the IPO, net of underwriting costs, the $26.3 million lower cash distributions in 2024 compared to the same period in the prior year, and $4.0 million in higher net inflows from the change in carrier liabilities in the 2024 compared to the same period in the prior year.

These changes were partially offset by the decrease of $41.0 million in proceeds from the drawdown of the Revolving Facility in the prior year while the current year has none, repayment of the outstanding balance of the Revolving Facility amounting to $41.0 million using a portion of the net proceeds from the IPO and repayment of the term loans amounting to $2.4 million in 2024 while the prior year had repayment of $2.6 million and $1.0 million in payments of deferred offering costs and deferred acquisition payable, respectively, in 2024 while the prior year had $0.8 million and $0.01 million, respectively.

Financing activities from continuing operations used $20.5 million and provided $143.4 million of cash for the years ended December 31, 2025 and 2024 , respectively.

The change in ou r net financing outflows was primarily due to the absence of the $193.6 million net IPO proceeds received in the prior year, $41.5 million decrease in repayment of borrowings, $6.6 million increase in distributions to members, $3.1 million payment related to tax withholding on vesting of equity awards, and $2.1 million net decrease in carrier liabilities during the year ended December 31, 2025.

Future sources and uses of liquidity

Our sources of liquidity include (1) cash on hand, (2) net working capital, (3) cash flows from operations and (4) borrowings on our Credit Agreements.

We expect to have sufficient financial resources to meet our business requirements over the next 12 months and for the long-term, including the ability to service our debt and contractual obligations, finance capital expenditures and make distributions, including tax distributions, to our stockholders.

We expect that our primary liquidity needs will comprise of cash needed to (1) provide capital to facilitate the organic growth of our business, (2) pay operating expenses, including cash compensation to our independent agents and our employees, (3) potential future payments under the Tax Receivable Agreement, if exchanges of LLC Units occur (no such payments were required during 2025), (4) fund acquisitions, (5) pay interest and principal due on borrowings under our Credit Agreements, (6) pay income taxes and (7) make potential future payments of dividends, if and when declared by our board of directors.

Although cash from operations is expected to be sufficient to service these activities, we have the ability to borrow under our Credit Agreements to accommodate any timing differences in cash flows.

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We have certain obligations related to debt maturities and operating leases.

As of December 31, 2024, we had $1.0 million of non-cancelable operating lease obligations for the next 12 months.

For the periods following the next 12 months, we have an additional $3.4 million of non-cancellable operating lease obligations.

As of December 31, 2025, we had $1.3 million of n on-cancelable operating lease obligations for the next 12 months.

For the periods following the next 12 months, we have an addition al $2.9 million o f non-cancellable operating lease obligations.

See Note 5, “Operating Leases,” to our consolidated financial statements included elsewhere in this Annual Report for additional information .

In addition, as of December 31, 2024, we had $2.5 million of debt maturities for the next 12 months comprised of $1.9 million of the remaining balance under the Term Loan C, and $0.6 million in acquisition-related notes.

For the periods following the next 12 months, we have an additional $5.1 million of debt maturities representing $4.0 million under the Term Loan C, and $1.1 million in acquisition-related notes.

In addition, as of December 31, 2025, we had $3.5 million of debt maturities for the next 12 months comprised of $2.0 million of the remaining balance under the Term Loan C, and $0.6 million in acquisition-related notes, and $0.9 million of acquisition-related payables.

For the periods following the next 12 months, we have an additional $8.7 million of debt maturities representing $2.0 million under the Term Loan C, $0.5 million in acquisition-related notes, and $6.1 million of acquisition-related payables.

As of December 31, 2025, there was no outstanding balances under our Revolving Facility.

In the future, any outstanding balances under our Revolving Facility, if any, will become due and payable during 2028.

Annual interest rates on the acquisition-related notes are 3.75% , 4.69% and 5.00% , and our effective interest rates on the Term Loan C for the year ended December 31, 2024 was 3.06%.

As of December 31, 2024, we have an interest rate swap agreement associated with the Term Loan C, which converted the floating interest rates on these loans to fixed

interest rates.

Se e Note 6 “Derivatives” and Note 8, “Debt” to our consolidated financial statements included elsewhere in this Annual Report for additional information.

Annual interest rates on the acquisition-related notes are 3.75%, 4.69% and 5.00%, and our effective interest rates on the Term Loan C for the year ended December 31, 2025 wa s 4.185%.

As of December 31, 2025, we have an interest rate swap agreement associated with the Term Loan C, which converted the floating interest rates on these loans to fixed interest rates.

“Derivatives” and Note 8, “Debt and Deferred Acquisition Payables” to our consolidated financial statements included elsewhere in this Annual Report for additional information.

Tax receivable agreement

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federal income tax rates applicable to corporations.

In addition to tax expenses, we also incur expenses related to our operations and we are required to make payments under the Tax Receivable Agreement.

In addition to tax expenses, we also incur expenses related to our operations and we may be required to make payments under the Tax Receivable Agreement in the future, if and when exchanges of LLC Units occur.

As of December 31, 2025, no exchanges had occurred, and no amounts were payable under the Tax Receivable Agreement.

Due to the uncertainty of various factors, we cannot precisely quantify the likely tax benefits we will realize as a result of LLC Unit exchanges and the resulting amounts we are likely to pay out to holders of LLC Units pursuant to the Tax Receivable Agreement;

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We believe our significant accounting policies could potentially produce materially different results if we were to change underlying assumptions, estimates or judgments.

The accounting policies that we believe reflect our more significant estimates, judgments and assumptions that are most critical to understanding and evaluating our reported financial results are:

revenue recognition, intangible assets impairment, and income taxes.

“Summary of Significant Accounting Policies,” to our consolidated financial statements included elsewhere in this Annual Report for a summary of our significant accounting policies.

The accounting policies that we believe reflect our more significant estimates, judgments and assumptions that are most critical to understanding and evaluating our

reported financial results are:

revenue recognition, intangible assets impairment, income taxes and contingent consideration.

See Note 2, “Summary of Significant Accounting Policies,” to our consolidated financial statements included elsewhere in this Annual Report for a summary of our significant accounting policies.

The critical accounting estimates relating to our significant accounting policies are as follows:

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Commission income

The determination of transaction price for commission income is impacted by policy cancellation at the discretion of the Client, and such a cancellation would result in our commission being limited to the period that the policy was in force.

We estimate any expected variable consideration, endorsements, or cancellations, based on historical information, at the time commission income is earned and recognized.

We evaluate the assumptions used and adjust those accordingly as experience changes.

Commission income represents the largest component of the Company’s revenue and is generated from commissions earned on the placement and servicing of insurance policies between insurance carriers and policyholders.

The accounting for commission income requires management to make estimates and assumptions that involve judgment and uncertainty and that could materially affect the timing and amount of revenue recognized.

We consider commission income to be a critical accounting policy because determining the amount and timing of revenue recognition requires management to apply judgment in estimating amounts expected to be realized and in assessing the nature and timing of performance obligations.

While management believes the estimates and assumptions used are reasonable, actual results may differ from those estimates.

For the majority of the Company’s commission arrangements, revenue is recognized at a point in time, generally at the binding or effective date of the insurance policy, when the Company has substantially completed its placement services.

In certain arrangements, including policies assumed through take-out programs where the Company did not originate the policy, revenue is recognized over time as ongoing servicing obligations are performed over the remaining policy term.

The critical estimates and assumptions involved in recognizing commission income include:

• Estimated policy cancellations and endorsements, which impact the amount of commission ultimately earned and may result in adjustments to previously recognized revenue;

• Expected collectability, which is based on historical experience with insurance carrier partners and current market conditions;

• Estimation of variable consideration, including contingent commissions, as described below, which depend on future retention, loss experience, or premium volume and are recognized only to the extent that a significant reversal of revenue is not probable;

• Determination of the servicing period for certain assumed policies, up to 12 months, which affects the timing of revenue recognition for commissions recognized over time.

Management develops these estimates using historical data by product type and tenure, adjusted for known trends or events that may affect future outcomes.

Changes in these assumptions, particularly changes in cancellation patterns or servicing assumptions for assumed policies, could materially impact revenue recognized in future periods.

Because these estimates affect both the timing and amount of revenue recognized, changes in assumptions or differences between estimated and actual outcomes may affect comparability between reporting periods.

In particular, changes in cancellation experience or the mix of commission arrangements recognized at a point in time versus over time may cause fluctuations in reported revenue that are not necessarily indicative of changes in underlying business activity or operating performance.

The recognition of commission income requires management to exercise judgment in determining whether the Company’s performance obligations are satisfied at a point in time or over time.

For most policies placed by the Company, the performance obligation is satisfied at the time the policy is bound, as the Company’s primary obligation is the placement of coverage between the insurance carrier and the insured.

For certain policies, including assumed or take-out policies where the Company did not originate the policy, the Company performs ongoing servicing activities that represent a performance obligation satisfied over time, and the related commission income is recognized over the remaining policy term.

Contingent income

The timing of revenue recognition and constraints applied to contingent commissions are based on estimates and assumptions.

Contingent income is paid when we meet or exceed certain premium volumes and/or falls below specific loss ratio quotas predetermined by its insurance carriers.

Contingent income is paid when we meet or exceed certain premium volumes and/or fall below specific loss ratio quotas predetermined by insurance carriers.

Because of the uncertainty regarding estimated loss ratio and premium volume, we estimate the contingent income based on specific factors such as historical trends, written premium estimates, and loss ratios, which are used to accrue the contingent income during the year.

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(i) a significant underperformance relative to historical or projected future operations, (ii) significant negative or economic trends, and (iii) a significant decline in the market capitalization of the Company.

If it is determined that the recoverable of the intangible asset is unlikely due to the existence of one of the triggering events noted above, an impairment analysis is performed.

If it is determined that the recoverability of the intangible asset is unlikely due to the existence of one of the triggering events noted above, an impairment analysis is performed.

We must make assumptions regarding the estimated cash flows and other factors to determine the fair value of the identified asset.

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In making this determination, the Company considers all available favorable and unfavorable evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations.

The Company recognizes a valuation allowance if it is determined that it is more likely than not that the deferred tax asset will not be realized.

Estimating future taxable income is inherently uncertain and requires significant judgement.

Based on our evaluation of this evidence, we have recorded a valuation allowance against our deferred tax assets.

Estimating future taxable income is inherently uncertain and requires significant judgment.

In projecting future taxable income, we consider our historical results, growth strategies, future market trends and incorporate certain other assumptions.

If we determine in the future that we will not be able to fully utilize all or part of these deferred tax assets, the Company would record a valuation allowance through earnings in the period the determination was made, which would have an adverse effect on our results of operations and earnings in future periods.

Changes in tax laws and rates could affect recorded deferred tax assets and liabilities in the future.

Changes in our estimates of future taxable income, changes in tax laws or rates, or other relevant factors could result in adjustments to our valuation allowance in future periods.

Any such adjustments could have a material impact on our results of operations.

Other than those potential impacts, we do not believe there is a reasonable likelihood there will be a material change in the tax related balances or valuation allowances.

However, due to the complexity of some of these uncertainties, the ultimate resolution may significantly differ from our estimate.

Contingent Consideration

Certain acquisitions of select Books of Business that do or do not constitute a complete business enterprise include contingent consideration arrangements, which are based on the acquired Book of Business achieving thresholds related to future revenues or earnings before interest, tax, depreciation, and amortization.

Contingent consideration arrangements can reduce the risk of overpaying for acquisitions if certain results are not achieved.

The Company accounts for contingent consideration relating to acquisitions as a Deferred Acquisition Payable and a corresponding asset adjustment at the date of acquisition.

Once recognized, the contingent consideration is not derecognized until the contingency is resolved and the consideration is issued or becomes issuable.

The Deferred Acquisition Payable is continually remeasured at each balance sheet date by recording changes in the fair value as an offsetting adjustment to the acquired asset in the Consolidated Balance Sheets.

The ultimate settlement of the contingent consideration may be for amounts that are materially different from the amounts initially recorded and may cause volatility in the Company’s results of operations.

The fair value of contingent consideration becomes more certain as the acquired Books of Business approach their respective settlement date.

Recent accounting pronouncements

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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 7. Management’s Discussion and Analysis