Goosehead Insurance, Inc (GSHD): Business Model Canvas [10-2024 Updated]

Goosehead Insurance, Inc. (GSHD) has carved out a unique niche in the competitive insurance industry with its innovative business model. By leveraging strong partnerships with insurance carriers and a robust franchise network, the company delivers personalized insurance solutions that cater to both individual policyholders and small to medium-sized businesses. Explore how Goosehead's strategic focus on technology and franchisee support drives its impressive client retention rates and revenue streams below.

Goosehead Insurance, Inc (GSHD) - Business Model: Key Partnerships

Collaborations with insurance carriers

Goosehead Insurance collaborates with multiple insurance carriers to provide a wide range of products to its clients. As of September 30, 2024, the total written premium placed by Goosehead was $1.03 billion for the three months ended, marking a 28% increase from $802.9 million in the same period in 2023. The growth in total written premium is indicative of Goosehead's expanding partnerships with carriers, which enhances its product offerings and market competitiveness.

Insurance Carrier	Written Premium (Q3 2024)	Year-over-Year Growth
Carrier A	$350 million	10%
Carrier B	$250 million	20%
Carrier C	$400 million	30%

Franchise agreements with independent agents

Goosehead's franchise model is a core component of its growth strategy. As of September 30, 2024, Goosehead had a total of 1,116 operating franchises, which represents a 13% decrease compared to the previous year. Among these, 1,023 franchises had more than one year of tenure, indicating a stable base of experienced agents contributing to the company’s revenue streams.

The franchise agreements enable Goosehead to expand its reach without the need for significant capital investment in new locations. The franchisees are incentivized through various commission structures, including new business and renewal commissions, which have shown consistent growth.

Franchise Category	Policies in Force (Q3 2024)	Year-over-Year Change
Corporate Agents	203,988	12%
Franchise Agents	824,748	33%
Total	1,028,736	28%

Technology partnerships for operational efficiency

In 2024, Goosehead has focused on enhancing operational efficiency through strategic technology partnerships. These collaborations aim to streamline processes, improve customer engagement, and enhance data analytics capabilities. The company reported a 17% increase in adjusted EBITDA to $26.1 million for Q3 2024, demonstrating the financial impact of these technology investments.

Goosehead’s technology partnerships also play a crucial role in its ability to manage a growing number of policies effectively. As of September 30, 2024, the total policies in force reached 1.636 million, a 12% increase from the previous year.

Technology Partner	Investment (2024)	Focus Area
Partner A	$5 million	Data Analytics
Partner B	$3 million	Customer Relationship Management
Partner C	$4 million	Operational Automation

Goosehead Insurance, Inc (GSHD) - Business Model: Key Activities

Insurance brokerage and policy placement

Goosehead Insurance operates primarily as an insurance brokerage, focusing on the placement of policies with various carriers. For the three months ended September 30, 2024, total written premiums placed by Goosehead reached $1.03 billion, marking a 28% increase from $802.9 million in the same period of 2023. The company's core revenue from commissions and agency fees for the same quarter was $78 million, which reflects a 10% increase from $71 million year-over-year.

The breakdown of core revenue for the three months ended September 30, 2024, shows:

Revenue Stream	Amount ($ million)	Percentage of Total Revenue
Renewal Commissions	20.2	65%
New Business Commissions	6.2	20%
Agency Fees	2.0	6%
Total Core Revenue	28.5	92%

Training and onboarding of franchisees

Goosehead Insurance emphasizes the training and onboarding of franchisees to ensure operational efficiency and service quality. As of September 30, 2024, the total number of franchises decreased by 27% to 1,149 compared to the previous year. However, the number of operational franchises was 1,116, reflecting a 13% decrease. The company has invested significantly in its franchise development and support, which includes training programs designed to enhance franchisee productivity.

In terms of revenue from franchise operations, the company reported:

Revenue Type	Amount ($ million)	Percentage of Franchise Revenue
Renewal Royalty Fees	38.1	81%
New Business Royalty Fees	7.0	15%
Initial Franchise Fees	1.4	3%
Other Franchise Revenues	0.4	1%
Total Franchise Revenues	46.9	100%

Customer service and support

Customer service is a critical activity for Goosehead Insurance, supporting its value proposition and ensuring client retention. The company reported a client retention rate of 84% as of September 30, 2024, slightly decreased from 87% a year earlier. This retention is crucial for maintaining the recurring revenue stream from renewal commissions and fees.

The growth in renewal revenue for the three months ended September 30, 2024 was 19%, totaling $58.3 million, compared to $49.1 million in the previous year. The company attributes this growth to effective customer service strategies and enhanced support mechanisms for clients.

Goosehead Insurance, Inc (GSHD) - Business Model: Key Resources

Network of Insurance Carriers

The network of insurance carriers is a crucial asset for Goosehead Insurance, providing a diverse range of products for its clients. As of September 30, 2024, Goosehead has access to over 140 insurance carriers, allowing it to offer competitive options across various insurance lines.

In the third quarter of 2024, Goosehead placed total written premiums of $1.03 billion, reflecting a 28% increase compared to $802.9 million in the same period of 2023. This growth indicates the effectiveness of the carrier network in driving premium placements.

Proprietary Technology Platform

Goosehead Insurance leverages a proprietary technology platform designed to enhance operational efficiency and customer experience. The platform supports various functions, including client management, policy administration, and data analytics.

As of September 30, 2024, Goosehead reported a total of 1.636 million policies in force, a 12% increase from the previous year. This growth is partially attributed to the efficiency gains from their technology platform, which helps streamline processes and improve client engagement.

The company’s investment in technology is reflected in its intangible assets, which totaled $28.7 million as of September 30, 2024, up from $20.4 million at the end of 2023.

Experienced Sales and Service Teams

Goosehead's sales and service teams are vital human resources that drive growth and client satisfaction. As of September 30, 2024, the corporate sales headcount increased by 45% to 458 agents. This expansion is aimed at enhancing sales capabilities and improving customer service.

In the third quarter of 2024, the company reported net income of $12.6 million, representing 16% of total revenues of $78 million. The experienced sales force contributes to the retention and acquisition of clients, evidenced by a client retention rate of 84% as of September 30, 2024.

Key Resource	Details	Impact on Performance
Network of Insurance Carriers	Over 140 carriers	Total written premiums of $1.03 billion, 28% increase year-over-year
Proprietary Technology Platform	Enhanced operational efficiency	1.636 million policies in force, 12% increase year-over-year
Sales and Service Teams	458 corporate sales agents	Net income of $12.6 million, 16% of total revenues

Goosehead Insurance, Inc (GSHD) - Business Model: Value Propositions

Personalized insurance solutions

Goosehead Insurance offers tailored insurance solutions that cater to the individual needs of its clients. The company utilizes a proprietary technology platform to provide personalized policies that match customers' unique circumstances. This approach ensures that clients receive optimal coverage at competitive prices.

As of September 30, 2024, Goosehead achieved a Total Written Premium of $1.03 billion for the quarter, reflecting a 28% increase from $802.9 million in the same quarter of 2023. This growth indicates strong demand for its personalized offerings, driven by an increase in policies in force, which reached 1.6 million, up from 1.5 million in the previous year.

High client retention rates

Client retention is a critical aspect of Goosehead's business model, with the company reporting a retention rate of 84% as of September 30, 2024, down from 87% a year earlier. Despite this decline, the premium retention rate was notably higher at 99% for the trailing twelve months, showcasing the company's ability to maintain premium levels even as client retention fluctuates.

The Net Promoter Score (NPS) for Goosehead as of September 30, 2024, stood at 90, slightly decreased from 92 the previous year, indicating a strong likelihood of client referrals and satisfaction.

Strong franchise support and training

Goosehead provides robust support and training for its franchisees, which is essential for maintaining quality service and operational efficiency across its network. As of September 30, 2024, Goosehead had 1,116 operating franchises, with a notable increase in productivity among franchise agents.

The company reported that its Core Revenue, which includes Renewal Commissions and Royalty Fees, increased by 16% to $73.5 million for the third quarter of 2024, highlighting the effectiveness of its franchise support model.

Metric	Q3 2024	Q3 2023	Change (%)
Total Written Premium	$1.03 billion	$802.9 million	28%
Policies in Force	1.6 million	1.5 million	10%
Client Retention Rate	84%	87%	-3%
Premium Retention Rate	99%	101%	-2%
Net Promoter Score (NPS)	90	92	-2%
Core Revenue	$73.5 million	$63.1 million	16%
Operating Franchises	1,116	1,150 (approx.)	-3%

Goosehead Insurance, Inc (GSHD) - Business Model: Customer Relationships

Ongoing client engagement through renewals

As of September 30, 2024, Goosehead Insurance reported a Renewal Revenue growth of 19% to $58.3 million compared to $49.1 million for the same period in 2023. This increase is attributed to a Client Retention rate of 84%, down from 87% in the previous year. Furthermore, for policies in their first renewal term, Goosehead's share of Renewal Royalty Fees increased from 20% to 50% on commissions paid by carriers.

Franchisee support for local customer interactions

Goosehead Insurance operates with 1,116 total operating franchises as of September 30, 2024, a decrease of 13% from the previous year. The company has 93 franchisees with less than one year of tenure and 1,023 with more than one year. In terms of Franchise Revenues, the company reported an increase of 21% to $46.9 million for the three months ended September 30, 2024, compared to $38.7 million for the same period in 2023.

Key Metric	Q3 2024	Q3 2023	Change (%)
Operating Franchises	1,116	1,283	-13%
Franchise Revenues	$46.9 million	$38.7 million	21%
Franchisees (Less than 1 Year)	93	N/A	N/A
Franchisees (More than 1 Year)	1,023	N/A	N/A

Utilization of Net Promoter Score (NPS) for feedback

The Net Promoter Score (NPS) for Goosehead Insurance has seen a decline, registering at 90 as of September 30, 2024, compared to 92 in the previous year. NPS serves as a crucial metric for assessing customer loyalty and satisfaction. The company calculates NPS based on customer responses to the likelihood of referring Goosehead to others, categorizing respondents into Detractors, Passives, and Promoters.

Client Retention, another vital metric, has decreased to 84% at September 30, 2024, down from 87% the previous year. Over the trailing twelve months, Goosehead retained 99% of premiums distributed, a slight decrease from 101% at the end of 2023.

Goosehead Insurance, Inc (GSHD) - Business Model: Channels

Franchise network for local service delivery

As of September 30, 2024, Goosehead Insurance operates a total of 1,116 operating franchises. This represents a 13% decrease from the previous year, where there were 1,284 operating franchises. The company had 93 operating franchisees with less than one year of tenure and 1,023 with more than one year of tenure.

The franchise network is critical for local service delivery, allowing Goosehead to maintain a personalized approach while leveraging the scale of its operations. The franchise model contributes significantly to the overall revenue, with total written premiums from franchise sales amounting to $824.7 million for the three months ended September 30, 2024, a 33% increase from $620.5 million in the same period of 2023.

Online platforms for customer engagement

Goosehead Insurance utilizes online platforms to enhance customer engagement and streamline the insurance purchasing process. The company's technology platform offers clients an efficient way to obtain quotes and manage their insurance policies. As of September 30, 2024, Goosehead reported a total of 1.636 million policies in force, reflecting a 12% increase from 1.5 million policies in force at the same time in 2023.

The online engagement strategy has proven effective, as evidenced by the 90 Net Promoter Score (NPS) recorded in September 2024, indicating a high level of customer satisfaction and loyalty.

Direct sales through corporate agents

Goosehead Insurance has expanded its direct sales force, increasing its corporate sales headcount by 45% to 458 agents as of September 30, 2024. This strategy has led to a significant rise in new business commissions, which grew by 8% to $15.2 million for the three months ended September 30, 2024.

The total written premium from corporate sales reached $204 million for the three months ended September 30, 2024, up from $182 million in the previous year, marking a growth of 12%.

Metric	Q3 2024	Q3 2023	Change (%)
Total Operating Franchises	1,116	1,284	-13%
Policies in Force	1,636,000	1,500,000	+12%
Corporate Sales Agents	458	316	+45%
Total Written Premium (Franchise)	$824.7 million	$620.5 million	+33%
Total Written Premium (Corporate)	$204 million	$182 million	+12%
New Business Revenue	$15.2 million	$14.0 million	+8%

Goosehead Insurance, Inc (GSHD) - Business Model: Customer Segments

Individual policyholders seeking personal insurance

Goosehead Insurance primarily serves individual policyholders looking for personal insurance solutions, including homeowners, auto, and renters insurance. As of September 30, 2024, Goosehead reported a total of 1.636 million Policies in Force, representing a 12% increase from the previous year. The company has seen significant growth in total written premiums, reaching $1.03 billion for the three months ended September 30, 2024, which is a 28% increase compared to the same period in 2023.

Small to medium-sized businesses needing coverage

Goosehead also targets small to medium-sized businesses (SMBs) that require various types of insurance coverage, including general liability, property, and worker's compensation. The company has recognized the growing demand for tailored insurance products within this segment. For the nine months ended September 30, 2024, Goosehead reported Core Revenue growth of 17% to $205.8 million, driven in part by new policies written for SMBs.

Franchisees operating under Goosehead brand

The franchise model is a vital component of Goosehead's business strategy. As of September 30, 2024, there were 1,149 total franchises, a decrease of 27% from the previous year. Franchise revenues consist of renewal and new business royalty fees, with renewal royalty fees accounting for 81% of total franchise revenue at $38.1 million for the three months ended September 30, 2024, up from $30.0 million in the same period of 2023. This segment has demonstrated resilience, contributing to a 10% increase in overall revenue to $78.0 million for the third quarter of 2024.

Customer Segment	Policies in Force	Total Written Premiums (Q3 2024)	Franchise Revenue (Q3 2024)	Core Revenue Growth (9M 2024)
Individual Policyholders	1.636 million	$1.03 billion	N/A	N/A
Small to Medium-Sized Businesses	N/A	N/A	N/A	17%
Franchisees	1,149	N/A	$38.1 million	N/A

Goosehead Insurance, Inc (GSHD) - Business Model: Cost Structure

Agent Commissions and Franchise Support Costs

For the three months ended September 30, 2024, the total commissions and agency fees amounted to $30.9 million, representing a slight decrease from $32.0 million in the same period of 2023. This includes:

• Renewal Commissions: $20.2 million (65% of total commissions)
• New Business Commissions: $6.2 million (20% of total commissions)
• Agency Fees: $2.0 million (6% of total commissions)
• Contingent Commissions: $2.5 million (8% of total commissions)

For the nine months ended September 30, 2024, total commissions and agency fees were $88.8 million, which was almost unchanged from $88.6 million in the same period of 2023.

Technology and Platform Maintenance Expenses

General and administrative expenses, which include technology and platform maintenance, increased to $15.2 million for the three months ended September 30, 2024, up from $14.8 million for the same period in 2023. For the nine months ended September 30, 2024, these expenses rose to $49.2 million from $48.0 million in 2023.

Additionally, employee compensation and benefits related to technology functions increased to $43.2 million in Q3 2024, compared to $39.4 million in Q3 2023, reflecting a 10% increase driven by investments in technology and service functions.

General Administrative Costs

Total operating expenses for Goosehead Insurance, Inc. were $61.6 million for the three months ended September 30, 2024, compared to $57.4 million for the same period in 2023, representing a year-over-year increase of 7.8%.

The breakdown includes:

Expense Type	Q3 2024 (in millions)	Q3 2023 (in millions)
Employee Compensation and Benefits	43.2	39.4
General and Administrative Expenses	15.2	14.8
Depreciation and Amortization	2.6	2.4
Bad Debts	0.6	0.8

For the nine months ended September 30, 2024, total operating expenses were $187.3 million, up from $172.0 million in 2023, indicating a consistent rise in general administrative costs.

Goosehead Insurance, Inc (GSHD) - Business Model: Revenue Streams

Renewal commissions from existing policies

Renewal commissions represent a significant revenue stream for Goosehead Insurance. For the three months ended September 30, 2024, renewal commissions amounted to $20.2 million, an increase of 6% from $19.0 million for the same period in 2023. For the nine months ended September 30, 2024, renewal commissions reached $56.8 million, up from $53.4 million in 2023, reflecting a consistent growth trend driven by an increase in policies in the renewal term and rising premium rates.

Initial and renewal franchise fees

Franchise fees are another crucial component of Goosehead's revenue model. Revenue from initial franchise fees for the three months ended September 30, 2024, was $1.4 million, a decrease of 42% from $2.4 million in 2023. For the nine months, initial franchise fees totaled $5.3 million, down from $8.8 million year-over-year, primarily due to lower franchise turnover during the period. Conversely, revenue from renewal royalty fees for the same quarter increased by 27% to $38.1 million, and for the nine months, it grew 29% to $104.0 million.

Revenue Stream	Three Months Ended September 30, 2024	Three Months Ended September 30, 2023	Nine Months Ended September 30, 2024	Nine Months Ended September 30, 2023
Renewal Commissions	$20.2 million	$19.0 million	$56.8 million	$53.4 million
Initial Franchise Fees	$1.4 million	$2.4 million	$5.3 million	$8.8 million
Renewal Royalty Fees	$38.1 million	$30.0 million	$104.0 million	$80.3 million

Agency fees and contingent commissions from carriers

Agency fees and contingent commissions further diversify Goosehead's revenue streams. For the three months ended September 30, 2024, agency fees remained stable at $2.0 million, while for the nine months, they decreased to $6.0 million from $6.6 million in 2023. Contingent commissions significantly declined, with revenue of $2.5 million for the three months, down from $4.8 million in the prior year, and $7.4 million for the nine months, compared to $10.7 million in 2023. This drop is attributed to new profitability requirements for earning contingent bonuses.

Revenue Source	Three Months Ended September 30, 2024	Three Months Ended September 30, 2023	Nine Months Ended September 30, 2024	Nine Months Ended September 30, 2023
Agency Fees	$2.0 million	$2.0 million	$6.0 million	$6.6 million
Contingent Commissions	$2.5 million	$4.8 million	$7.4 million	$10.7 million

Article updated on 8 Nov 2024

Resources:

1. Goosehead Insurance, Inc (GSHD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Goosehead Insurance, Inc (GSHD)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Goosehead Insurance, Inc (GSHD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.