Goosehead Insurance (GSHD, Financial) disclosed its financial performance for the first quarter, highlighting a revenue of $75.58 million, slightly below market expectations of $78.09 million. Despite this shortfall, the company demonstrated strong growth in other key areas.
The company's premium growth surged by 22%, while total and core revenues increased by 17% compared to the prior year. This robust growth was mirrored in their net income for the quarter, which rose by 46%. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also showed a notable increase of 32%, indicating improved operational efficiency.
Goosehead reported a net income margin of 4% and a significant expansion in their adjusted EBITDA margin, which widened by 300 basis points to reach 21%. The company attributes this progress to strategic investments in its production capabilities, service functions, technology, and AI-driven tools—all aimed at enhancing the personal lines experience for clients and partners.
Currently, Goosehead places approximately $4 billion in annual premiums, still a small fraction of the over $500 billion U.S. personal lines market. The company views the vast market potential as a significant growth opportunity and remains focused on expanding its competitive position. With these developments, Goosehead Insurance continues to aim towards its ambitious goal of becoming the largest distributor of personal lines insurance in the United States.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 8 analysts, the average target price for Goosehead Insurance Inc (GSHD, Financial) is $119.13 with a high estimate of $150.00 and a low estimate of $43.00. The average target implies an upside of 12.49% from the current price of $105.90. More detailed estimate data can be found on the Goosehead Insurance Inc (GSHD) Forecast page.
Based on the consensus recommendation from 10 brokerage firms, Goosehead Insurance Inc's (GSHD, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Goosehead Insurance Inc (GSHD, Financial) in one year is $69.43, suggesting a downside of 34.44% from the current price of $105.9. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Goosehead Insurance Inc (GSHD) Summary page.
Key Business Developments
Release Date: February 24, 2025
- Total Revenue Growth: 20% for 2024.
- Core Revenue Growth: 17% for 2024.
- Premium Growth: 29% for 2024.
- EBITDA: Nearly $100 million, up 43% year over year, with a record margin of 32%.
- Franchise Productivity Growth: 49% in 2024.
- Franchise Producers: Totaled 2,092, up 7% year over year.
- Corporate Producers: 417 at year-end, an increase of 39%.
- Quarterly Premiums: $966 million, up 28% year over year.
- Full Year Premiums: $3.81 billion, up 29% for 2024.
- Policies in Force: 1.7 million, a 13% increase.
- Client Retention: Stable at 84% as of year-end.
- Adjusted EBITDA Growth: 164% to $37.4 million for the quarter.
- Operating Cash Flow: $71.5 million, up 41% for the year.
- Free Cash Flow: $59.4 million, up 53% for the year.
- 2025 Revenue Guidance: Expected between $350 million and $385 million.
- 2025 Premium Guidance: Expected between $4.65 billion and $4.88 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Goosehead Insurance Inc (GSHD, Financial) reported a 20% total revenue growth and a 29% premium growth for 2024, showcasing strong financial performance.
- The company achieved an EBITDA near $100 million, up 43% year over year, with a record margin of 32%, indicating efficient cost management and profitability.
- Goosehead Insurance Inc (GSHD) expanded its franchise distribution, with franchise productivity growing 49% in 2024, and reduced franchise terminations, reflecting a healthier franchise network.
- The company is leveraging technology advancements, such as the quote-to-issue platform and AI tools, to enhance operational efficiency and client service.
- Goosehead Insurance Inc (GSHD) is strategically expanding its corporate and franchise agent count, with a focus on diversifying geographically and increasing producer headcount to drive future growth.
Negative Points
- The company faces challenges from natural catastrophes and insurance market volatility, which have impacted the overall insurance landscape.
- Goosehead Insurance Inc (GSHD) anticipates a potential decrease in contingent commissions in 2025 compared to 2024, reflecting uncertainty in loss trends.
- The admitted market remains tight in certain regions, such as Texas, affecting product availability and potentially limiting growth opportunities.
- Client retention has been stable at 84%, but the company aims to return to historical highs of 89%, indicating room for improvement in customer retention.
- The company is cautious about the impact of macroeconomic factors and pricing tailwinds on premium growth, leading to conservative guidance for 2025.
