Goosehead Insurance, Inc. (GSHD) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial metrics, strategic partnerships, and optimistic guidance, with a focus on growth and innovation. The Q&A section highlights management's confidence in their strategies, despite some uncertainties around AI and Digital Agent 2.0 rollout. The market cap of $1.45 billion suggests a moderate reaction to these positive developments, leading to a 'Positive' sentiment rating.
Key Financial Performance
Total Revenue (Q4 2025) $105.3 million, up 12% year-over-year. Growth attributed to improvement in client retention and new business production across all sales networks.
Total Revenue (Full Year 2025) $365.3 million, up 16% year-over-year. Growth driven by client retention and new business production.
Core Revenues (Q4 2025) $78.2 million, up 15% year-over-year. Growth due to client retention and new business production.
Core Revenues (Full Year 2025) $317.9 million, up 16% year-over-year. Growth attributed to client retention and new business production.
Adjusted EBITDA (Q4 2025) $39.2 million, up 5% year-over-year. Includes $2.9 million of strategic investments aimed at long-term shareholder value.
Adjusted EBITDA (Full Year 2025) $113.6 million, up 14% year-over-year. Adjusted EBITDA margin was 31%, driven by structural improvements and disciplined execution.
Total Written Premiums (Q4 2025) $1.1 billion, up 13% year-over-year. Franchise premiums grew 15%, while corporate premiums grew 4%.
Total Written Premiums (Full Year 2025) $4.4 billion, up 17% year-over-year. Growth driven by franchise and corporate premiums.
Policies in Force (End of 2025) 1.9 million, up 14% year-over-year. Growth accelerated from 13% in Q3 2025, driven by client retention and new business production.
Gross Payments Per Franchise Up 29% year-over-year. Increase attributed to higher cash flow enabling reinvestment in people and growth.
Producer Count Increased from 2,092 to 2,113 year-over-year. Growth driven by reinvestment and consolidation within the franchise network.
Operating Franchises Decreased from 1,103 to 1,009 year-over-year. Reduction due to consolidation, leading to higher productivity and efficiency.
Same-Store Sales (Q4 2025) Grew 19% year-over-year. Growth attributed to productivity improvements and reinvestment in the franchise network.
Corporate Sales Agents 374 at year-end, up 6% year-over-year. Growth due to expansion into new geographies and talent acquisition.
Enterprise Sales and Partnerships Headcount 115 at year-end, nearly doubled year-over-year. Growth driven by scaling partnerships and accessing new client pools.
Cash Flow from Operations (Full Year 2025) $91.8 million, up 28% year-over-year. Growth attributed to operational efficiency and reinvestment.
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Operating Highlights
Digital Agent 2.0: Launched in Texas with multiple auto and home insurance carriers, providing end-to-end choice buying experience. Plans for rapid expansion in product and geographic coverage in 2026.
Mobile App: Introduced to allow clients to manage policies across multiple carriers in one place.
AI-powered Virtual Assistant (Lily): Streamlined client interactions, reducing agent involvement and improving service efficiency.
Corporate Sales Expansion: Expanded to new geographies like Tempe, Arizona, and Nashville, Tennessee. Opened three new offices in 2026, with a fourth planned for April.
Enterprise Sales and Partnerships: Doubled new business production in 2025, addressing millions of mortgages serviced across the U.S. and providing incremental growth opportunities.
Franchise Network Productivity: Gross payments per franchise increased by 29% year-over-year. Producers per franchise rose from 1.9 to 2.1 by year-end.
Client Retention: Improved from 84% in Q2 to 85% in Q3, with continued upward momentum by year-end.
Policies in Force: Grew by 14% year-over-year, accelerating from 13% in Q3.
AI Integration: Focused on service efficiency, carrier-client matching, and targeted marketing. Launched AI-powered tools like Lily and implemented data-driven strategies for client retention and acquisition.
Technology Investments: Increased tech team size and developed proprietary tools to enhance agent and client experiences. Positioned as a leader in digital insurance distribution.
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Risk or Challenges
Market Cycles and Pricing Dynamics: The company is coming out of a sustained hard market characterized by elevated loss ratios, capital constraints, and tightening underwriting. While pricing has largely caught up with loss ratios, there is still uncertainty in market conditions that could impact growth and profitability.
AI Implementation Risks: The company acknowledges significant opportunity costs associated with chasing the wrong implementation of AI. Missteps in AI strategy could lead to wasted resources and missed opportunities for value creation.
Franchise Network Consolidation: The deliberate decision to prioritize quality over quantity in the franchise network has led to fewer operating agencies, which could impact short-term revenue growth despite long-term productivity gains.
Regulatory and Compliance Risks: Forward-looking statements are subject to various risks and uncertainties, including regulatory changes that could impact the company's operations and financial condition.
Economic and Housing Market Conditions: Challenging product and housing environments have impacted growth and profitability, and future economic uncertainties could further affect performance.
Technology and Digital Platform Execution: The success of the Digital Agent 2.0 platform and other technology initiatives depends on effective implementation and carrier relationships. Failure in execution could hinder growth and competitive positioning.
Partnership and Enterprise Sales Scaling: The enterprise sales and partnership network is still in the implementation phase, and delays or failures in scaling these channels could impact future growth.
Debt and Financial Leverage: The company has $298.5 million in total debt, which could pose risks if market conditions worsen or if cash flow generation does not meet expectations.
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Guidance & Outlook
Revenue Growth: Total revenues are expected to grow organically between 10% and 19% in 2026.
Written Premiums Growth: Total written premiums are expected to grow organically between 12% and 20% in 2026.
Core Revenue Growth: Low double-digit growth expected for the first half of 2026, with acceleration in the second half as pricing dynamics stabilize and benefits from partnerships and Digital Agent 2.0 investments materialize.
Adjusted EBITDA Margin: Margins are expected to be modestly down in 2026 due to investments in AI, Digital Agent 2.0, and partnerships platform, but these investments are anticipated to drive long-term growth and margin expansion.
Policies in Force: Continued acceleration in policies in force growth rate expected for 2026, driven by improved client retention, onboarding of new producers, and expansion of partnerships and enterprise sales business.
Contingent Commissions: Initial expectation for contingent commissions in 2026 is between 60 and 85 basis points of total written premium.
Strategic Investments: Incremental investments in AI, Digital Agent 2.0, and partnerships platform are expected to deliver long-term growth and margin expansion.
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Shareholder Return Plan
Share Repurchase Program: During the fourth quarter, we repurchased and retired 323,000 shares of our Class A stock, representing $22.5 million. For the full year 2025, we acquired $81.7 million of our Class A shares and combined with 2024, nearly $145 million and over 2 million shares, representing approximately 8% of our total Class A share count as of the beginning of 2024. Given the current market volatility, today, our Board of Directors authorized an additional $180 million share repurchase authorization and we plan to continue to be opportunistic when there's a market dislocation.
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Key Q&A
Q:How are you thinking with regards to home closing transactions and the insurance pricing environment for next year?
A:The company observed strong data in December followed by a weak January. Housing construction is not a significant headwind due to strategic partnerships and agent efforts. Guidance does not count on housing improvements through 2026. Pricing assumptions range from generally down at the low end to moderate increases at the high end of the guidance range.
Q:How would regulatory changes like profitability caps or tighter constraints on insurance pricing impact your business model?
A:The COO stated it is unlikely to happen and not beneficial for the market. The excess and surplus lines market may be more durable in such areas, but the company will monitor developments.
Q:Why don't you think agents will be disintermediated through the use of AI?
A:The CEO explained that home insurance is complex and requires human guidance. Clients prefer human interaction, and the company’s service function is a key differentiator. AI increases agent productivity rather than replacing them. The COO added that distributing directly to consumers is complex, and Goosehead is uniquely positioned with its ability to bind policies end-to-end without human intervention.
Q:Will the digital agent cause customer retention to decline as it becomes easier for customers to switch?
A:The COO stated that the digital agent has improved client retention by rounding out accounts and capturing full share of wallet. The CEO added that the platform is used strategically through partner networks to enhance client retention and service.
Q:How do consumers serviced by Digital Agent 2.0 find their way to Goosehead, and will you integrate with LLMs like ChatGPT?
A:Consumers primarily come through corporate partners rather than top-of-funnel search engines. The company is not focused on driving monoline auto business through advertising but instead targets high-quality clients through partnerships. Integration with LLMs may be considered if it aligns with strategic goals.
Q:What is your appetite and capacity for stock buybacks this year?
A:The company has strong cash flow and a $75 million revolving credit facility. It plans to be aggressive with buybacks, as it believes the stock is undervalued.
Q:What is the latest number for elevated investment spending in 2026?
A:The company expects $25 million to $35 million in total cash investment, with $8 million to $11 million hitting the P&L. In Q4 2025, $2.9 million related to the Digital Agent hit the P&L.
Q:How much of the 2.3 million potential mortgages from enterprise sales and partners is active today?
A:A small percentage is live today, but the embedded franchises are performing well. The company is optimistic about the pipeline and implementation progress.
Q:Why has new business royalty fee growth been volatile, and what is the outlook?
A:The company attributes volatility to franchise consolidation and underlying mortgage activity. Same-store sales were up 19% in Q4, and the top agencies are growing well. Growth is expected to accelerate in 2026.
Q:How will corporate sales headcount trend in 2026?
A:The company expects headcount to grow, supported by new offices and improved agent retention. The corporate sales team is strategic to the long-term vision.
Q:Will franchise producers increase meaningfully as the market opens up?
A:The company expects strong demand for new hires and aims to increase producers per franchise. Larger franchises are better positioned to hire and onboard staff.
Q:Will franchise consolidation dynamics work themselves out in 2026?
A:The company expects consolidation to slow but remain slightly elevated into 2027.
Q:What is embedded in the guidance range for retention?
A:The top end assumes continued improvements and acceleration in retention, while the bottom end assumes less improvement or stalling. Pricing stabilization and client-facing tools are expected to drive retention.
Q:Why was the Net Promoter Score (NPS) lower this quarter, and how is the Digital Agent 2.0 impacting client views?
A:The NPS reflects trailing 12-month data, including past price increases. The company introduced a CSAT score, which has been stable at 4.2 out of 5. Retention continues to improve, and tools like the mobile app and AI agent enhance client service.
Q:What additional pools of talent are you reaching into for recruiting, and how will they impact productivity?
A:The company is targeting experienced sales professionals to improve retention and productivity. Investments in training and management infrastructure are expected to enhance agent performance.
Q:What is your bias regarding retention in the guidance range?
A:The company expects retention to continue improving, supported by pricing stabilization and enhanced service efforts.
Q:Does your thesis about agents not being disintermediated by AI hold for 5-10 years?
A:The company believes it is best positioned to leverage AI due to proprietary data and carrier trust. It expects to remain a key distribution platform even in an AI-driven future.
Q:Does the guidance assume changes in product availability?
A:The guidance does not assume changes in product availability, as the market is currently stable with no significant issues.
Q:Is the Digital Agent 2.0 being rolled out nationally, and is it generating incremental business?
A:The rollout is focused on Texas initially, with plans to expand to other states. The platform generates incremental business by enabling agents to grow their books without additional effort.
Q:Will the proportion of premiums from Texas continue to decline?
A:Yes, the company is diversifying outside of Texas, and the proportion of premiums from Texas is expected to decline as other markets grow.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the potential long-term impact of AI on agent roles, stating that Goosehead is uniquely positioned but not providing specific strategies for a 5-10 year horizon. Additionally, they did not provide detailed metrics on the incremental business generated by Digital Agent 2.0 or the exact timeline for rolling out the platform nationally.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI ability
AI application
AI line
AI phone
AI value
AI wrapper
Agent platform
Agent scale
Agents client
Arizona Nashville
Digital Agent
Introduced Lily
KPIs example
KPIs partnership
Lily AI
Lily hundred
Lines insurance
Markets Vice
Personal Lines
United States
client carrier
distribution platform
founder
hundred carrier
implementation
insurance distribution
lifetime
loss ratio
market loss
objective
outcome
path
portion value
product market
ratio capital
set
stride
underwriting
value chain
GSHD Transcript
Goosehead Insurance, Inc. (GSHD) Q4 2025 Earnings Call Transcript
Positive2-17
The earnings call summary indicates strong financial metrics, strategic partnerships, and optimistic guidance, with a focus on growth and innovation. The Q&A section highlights management's confidence in their strategies, despite some uncertainties around AI and Digital Agent 2.0 rollout. The market cap of $1.45 billion suggests a moderate reaction to these positive developments, leading to a 'Positive' sentiment rating.
Goosehead Insurance, Inc (GSHD) Q3 2025 Earnings Call Transcript
Positive10-22
The earnings call summary and Q&A suggest a positive sentiment overall. Strong financial metrics, growth in new business, and strategic initiatives like AI and technology development are promising. Despite some margin concerns and investments impacting short-term profits, optimistic guidance and strategic partnerships indicate potential growth. The market cap is relatively small, suggesting a likely stronger reaction. The positive outlook on client retention, revenue growth, and shareholder returns, including a $60 million buyback, supports a positive stock price movement prediction.
Goosehead Insurance, Inc (GSHD) Q2 2025 Earnings Call Transcript
Unknown7-23
The earnings call revealed mixed insights. While there are optimistic long-term plans and new initiatives, immediate financial metrics like margin pressure and premium retention are concerning. The lack of guidance on critical areas, like tech investment and 2026 growth, adds uncertainty. The market cap indicates a moderate reaction, leading to a neutral sentiment.
Goosehead Insurance, Inc (NASDAQ:GSHD) Q4 2024 Earnings Call Transcript
Positive2-25
The earnings call summary shows strong financial performance with substantial cash flow growth, increased premiums, and healthy franchise turnover. The Q&A highlights optimistic guidance for margin expansion and revenue growth, despite some uncertainties in contingent commissions. The strategic growth in agents and franchises, along with positive market recovery signals in key states, supports a positive outlook. Given the market cap, the stock is likely to react positively, with a forecasted increase of 2% to 8% over the next two weeks.
GSHD Report
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