Leases
At December 31, 2025, Goosehead was obligated under a number of operating leases, exclusively leases for premises and equipment used for business purposes. These leases generally have terms of 8 years or less, determined based on the contractual maturity of the lease, and include periods covered by options to extend or terminate the lease when the Company is reasonably certain that it will exercise those options. None of these lease agreements impose restrictions on the Company’s ability to pay dividends, engage in debt or equity financing transactions or enter into further lease agreements. Certain of these leases contain escalation clauses that will increase rent payments based on maintenance, utility and tax increases, which are non-lease components and variable in nature. The Company elected not to separate lease and non-lease components of a contract for its real estate and equipment leases. As such, real estate and equipment lease payments represent payments on both lease and non-lease components.
Operating lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of the fixed future minimum lease payments over the lease term. The future lease payments are discounted at a rate that represents the Company’s collateralized borrowing rate for financing instruments of a similar term. We estimate this for our portfolio of leases using information obtained from our bankers. The ROU asset also includes any lease prepayments made, plus initial direct costs incurred, less any lease incentives received. Rent expense associated with operating leases is recognized on a straight-line basis over the lease term and included in occupancy expense within General and administrative expenses in the Consolidated statements of operations.
The following table provides information related to the Company’s leases as of December 31, 2025 and 2024 (in thousands):
| | | | | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
Right-of-use assets | | $ | 34,087 | | $ | 37,420 |
| | | | |
Short term lease liabilities | | 8,666 | | 6,535 |
Long term lease liabilities | | 51,168 | | 54,536 |
Total lease liabilities | | 59,834 | | 61,071 |
| | | | |
Weighted average remaining lease term (in years) | | 5.87 | | 6.71 |
Weighted average incremental borrowing rate | | 5.5 | % | | 5.3 | % |
The following schedule shows the components of lease cost for the years ended December 31, 2025 and 2024 (in thousands): | | | | | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
Gross operating lease cost | | $ | 7,923 | | | $ | 8,074 | |
Sublease income | | (1,082) | | | (672) | |
Net lease cost | | $ | 6,841 | | | $ | 7,402 | |
The following is a schedule of supplemental cash flow information related to leases for the year ended December 31, 2025 and 2024 (in thousands): | | | | | | | | | | | | | | |
| | December 31, |
| | 2025 | | 2024 |
| Cash paid for amounts included in the measurement of lease liabilities | | | | |
| Operating cash flows from operating leases | | $ | (9,250) | | | $ | (11,267) | |
| | | | |
| Right of use assets obtained in exchange for lease obligation | | | | |
| Operating leases | | $ | 5,713 | | | $ | 4,931 | |
The following is a schedule of future maturity of lease liability as of December 31, 2025 (in thousands):
| | | | | | | | |
| | |
| 2026 | | $ | 11,483 | |
| 2027 | | 13,083 | |
| 2028 | | 12,348 | |
| 2029 | | 11,192 | |
| 2030 | | 8,341 | |
Thereafter | | 14,414 | |
| Total lease payments | | 70,861 | |
| Less: imputed interest | | (11,026) | |
Future maturity of lease liability | | $ | 59,834 | |
| | |
| | |
As of December 31, 2025, the Company did not have any additional future operating lease commitments that were signed but had not yet commenced.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.