Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and the related notes and other financial information included elsewhere in this Quarterly Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed below and in the Annual Report, particularly in the section Part I, Item 1A. Risk Factors and in "Cautionary Note Regarding Forward-Looking Statements" in this Quarterly Report.
The following discussion contains commentary on the financial results derived from the unaudited Condensed Consolidated Financial Statements for the three and six months ended June 30, 2026 and June 30, 2025 of TWFG, Inc.
Overview
We are a leading, high-growth, independent distribution platform for personal and commercial insurance in the United States. 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. Our offerings are fulsome and flexible in that we offer all lines of insurance, multiple distribution contract options, M&A services, proprietary virtual assistants, proprietary technology, proprietary premium financing, unlimited continuing education, recognition programs, co-op funding, marketing support and overall lower costs to operate. 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.
We embrace a simple philosophy: "Our Policy is Caring," which is more than a motto. This philosophy informs the way we interact with all of our stakeholders and the communities in which they live and work. We seek to attract partners who come in every day with the commitment to making a difference in the lives of the people and communities we interact with. We treat our Clients, employees and stakeholders like family.
Certain income statement line items
Revenues
Commission income. We derive commission income from the placement of insurance contracts between insurance carriers and Clients. 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 range from 7% to 30%. On a consolidated basis, our average commission rate for 2025 was approximately 12.8%.
Our main obligation under our agency agreements with the insurance carriers is selling insurance contracts to our Clients. Each underlying insurance contract is a separate and distinct contract between the Client and the insurance carrier. Our Clients are not obligated to keep the insurance contract for the full term or renew it with the insurance carrier beyond its initial term. We are required to try to resell the insurance contract to our Client at the expiration of each policy term or shop for alternatives if our Client decides to terminate its existing insurance contract. We recognize commission income when the performance obligation of placing the insurance contract between our Client and the insurance carrier has been met and the insurance contract is in effect, based on its effective date.
Our agency agreements with the insurance carriers are non-exclusive and can typically be terminated unilaterally by either party. Additionally, either party can agree to amend the provisions of the agency agreements, which may affect our future commission income.
Contingent income. 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.
Fee income. Fee income is comprised primarily of policy fees, branch fees, license fees and third-party administrator ("TPA") fees. The Company receives policy fees as compensation for administrative services performed in connection with the placement and issuance of certain policies that are in addition to and separate from commissions paid by the insurance carriers. Branch fees include the monthly recurring fees assessed for the ongoing Client service and back-office support provided to independent branches operating exclusively through the Company pursuant to an exclusive Branch agreement and a one-time branch onboarding fee. License fees are fees assessed by the Company for the use of its proprietary applications. TPA fees are related to services performed based on service agreements with the insurance carriers.
Other 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):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | Amount | % of Total | Amount | % of Total | ||||||||||||||||||||||||||||||||||||||||
| Commission income | $ | 80,643 | 92 | % | $ | 54,562 | 90 | % | $ | 147,694 | 92 | % | $ | 103,347 | 90 | % | |||||||||||||||||||||||||||||||
| Contingent income | 2,167 | 2 | 2,033 | 3 | 4,102 | 2 | 3,696 | 3 | |||||||||||||||||||||||||||||||||||||||
| Fee income | 4,165 | 5 | 3,329 | 6 | 7,513 | 5 | 6,340 | 6 | |||||||||||||||||||||||||||||||||||||||
| Other income | 536 | 1 | 384 | 1 | 1,043 | 1 | 748 | 1 | |||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | 87,511 | 100 | % | $ | 60,308 | 100 | % | $ | 160,352 | 100 | % | $ | 114,131 | 100 | % | |||||||||||||||||||||||||||||||
Commission expense.
Commission expense is our largest expense, representing the consideration paid to our agents for producing and retaining business. We expect our commission expense to continue to increase corresponding with our expected business growth.
Salaries and employee benefits.
Salaries and employee benefits consist of base compensation and any bonuses, equity compensation and benefits paid and payable to employees. We operate in competitive markets and expect to continue to experience a general rise in compensation and benefits expense commensurate with expected growth in headcount, geographic expansion and the creation of new products and services.
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. 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.
Interest expense.
Interest expense consists of interest payable on indebtedness, commitment fees and imputed interest on deferred acquisition payables.
Interest income.
Interest income consists of interest earned on the Company's cash and cash equivalents which are not held in a fiduciary capacity.
Consolidated results of operations
The following is a discussion of our consolidated results of operations for the periods presented. This information is derived from our accompanying unaudited Condensed Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
The following table summarizes our results of operations for the periods presented (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | Amount | % of Total | Amount | % of Total | ||||||||||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Commission income | $ | 80,643 | 92 | % | $ | 54,562 | 90 | % | $ | 147,694 | 92 | % | $ | 103,347 | 90 | % | |||||||||||||||||||||||||||||||
| Contingent income | 2,167 | 2 | 2,033 | 3 | 4,102 | 2 | 3,696 | 3 | |||||||||||||||||||||||||||||||||||||||
| Fee income | 4,165 | 5 | 3,329 | 6 | 7,513 | 5 | 6,340 | 6 | |||||||||||||||||||||||||||||||||||||||
| Other income | 536 | 1 | 384 | 1 | 1,043 | 1 | 748 | 1 | |||||||||||||||||||||||||||||||||||||||
| Total revenues | 87,511 | 100 | % | 60,308 | 100 | % | 160,352 | 100 | % | 114,131 | 100 | % | |||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Commission expense | 42,491 | 61 | % | 34,151 | 65 | % | 79,521 | 61 | % | 65,965 | 65 | % | |||||||||||||||||||||||||||||||||||
Salaries and employee benefits | 11,781 | 17 | 9,493 | 18 | 21,682 | 17 | 17,689 | 18 | |||||||||||||||||||||||||||||||||||||||
Other administrative expenses | 8,587 | 12 | 5,400 | 10 | 15,977 | 12 | 10,124 | 10 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 7,065 | 10 | 3,901 | 7 | 13,234 | 10 | 7,260 | 7 | |||||||||||||||||||||||||||||||||||||||
Total operating expenses | 69,924 | 100 | % | 52,945 | 100 | % | 130,414 | 100 | % | 101,038 | 100 | % | |||||||||||||||||||||||||||||||||||
Operating income | 17,587 | 7,363 | 29,938 | 13,093 | |||||||||||||||||||||||||||||||||||||||||||
| Other non-operating income (expense) | |||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | (57) | (68) | (119) | (151) | |||||||||||||||||||||||||||||||||||||||||||
| Interest income | 759 | 1,751 | 1,973 | 3,614 | |||||||||||||||||||||||||||||||||||||||||||
| Other non-operating income (expense), net | (7) | 574 | 702 | 573 | |||||||||||||||||||||||||||||||||||||||||||
| Income before tax | 18,282 | 9,620 | 32,494 | 17,129 | |||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 1,031 | 620 | 2,164 | 1,276 | |||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 17,251 | $ | 9,000 | $ | 30,330 | $ | 15,853 | |||||||||||||||||||||||||||||||||||||||
Comparison of the Three Months Ended June 30, 2026 and 2025
Total revenues
The following table presents the disaggregation of our revenues by offerings (in thousands):
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||
| Agency-in-a-Box | $ | 42,316 | 48 | % | $ | 39,316 | 65 | % | |||||||||||||||
| Corporate Branches | 14,198 | 16 | 11,393 | 19 | |||||||||||||||||||
| Total Insurance Services | 56,514 | 64 | 50,709 | 84 | |||||||||||||||||||
| TWFG MGA | 30,486 | 35 | 9,233 | 15 | |||||||||||||||||||
| Other | 511 | 1 | 366 | 1 | |||||||||||||||||||
| Total revenues | $ | 87,511 | 100 | % | $ | 60,308 | 100 | % | |||||||||||||||
Total revenues for the three months ended June 30, 2026 increased by $27.2 million, or 45.1%, compared to the same period in the prior year. The $26.1 million, or 47.8%, increase in commission income was driven by TWFG MGA FL, LLC ("TWFG MGA FL") growth, new agent onboarding, strategic acquisitions, and higher commission income rates. Also contributing to the increase in total revenues were the $0.8 million, or 25.1%, increase in fee income, $0.2 million, or 39.6%, increase in other income, and $0.1 million, or 6.6%, increase in contingent income compared to the same period in the prior year. 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):
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||
| Agency-in-a-Box | $ | 39,667 | 49 | % | $ | 36,275 | 66 | % | |||||||||||||||
| Corporate Branches | 13,690 | 17 | 11,294 | 21 | |||||||||||||||||||
| Total Insurance Services | 53,357 | 66 | 47,569 | 87 | |||||||||||||||||||
| TWFG MGA | 27,286 | 34 | 6,993 | 13 | |||||||||||||||||||
| Total commission income | $ | 80,643 | 100 | % | $ | 54,562 | 100 | % | |||||||||||||||
Total commission income for the three months ended June 30, 2026 increased by $26.1 million, or 47.8%, compared to the same period in the prior year. The increase was primarily driven by growth in written premiums, including contributions from the acquisitions of TWFG MGA FL and the APIA MGA programs, which generate higher commission rates, as well as continued organic growth. Corporate store acquisitions completed after June 30, 2025 also contributed to the increase.
Commission income for Insurance Services increased by $5.8 million, or 12.2%, representing 10.6% of the total growth for the three months ended June 30, 2026, compared to the same period in the prior year. Agency-in-a-Box commission income increased by $3.4 million, or 9.4%, for the three months ended June 30, 2026 compared to the same period in the prior year mainly due to organic growth and acquisitions. Corporate Branches commission income increased by $2.4 million, or 21.2%, for the three months ended June 30, 2026 compared to the same period in the prior year. The increase was primarily driven by the acquisitions completed after June 30, 2025.
TWFG MGA commission income for the three months ended June 30, 2026 increased by $20.3 million, or 290.2%, representing 37.2% of the total growth, as compared to the same period in the prior year. This increase was primarily driven by the acquisitions and higher commission rates. TWFG MGA FL contributed $16.2 million of the total increase of $20.3 million.
Contingent income
Contingent income for the three months ended June 30, 2026 was $2.2 million, reflecting a $0.1 million, or 6.6%, increase compared to the same period in the prior year. Contingent income is unpredictable and dependent upon the target financial and performance metrics established by the insurance carriers.
Fee income
The following table presents the disaggregation of our fee income by major sources (in thousands):
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Policy fees | $ | 1,698 | 41 | % | $ | 1,082 | 33 | % | |||||||||||||||
| Branch fees | $ | 1,484 | 36 | $ | 1,416 | 43 | |||||||||||||||||
| License fees | 822 | 20 | 559 | 17 | |||||||||||||||||||
| TPA fees | 161 | 3 | 272 | 7 | |||||||||||||||||||
| Total fee income | $ | 4,165 | 100 | % | $ | 3,329 | 100 | % | |||||||||||||||
Fee income for the three months ended June 30, 2026 increased by $0.8 million, or 25.1%, compared to the same period in the prior year. Changes to individual components of fee income are discussed in detail below:
•Policy fees for the three months ended June 30, 2026 increased by $0.6 million, or 56.9%, compared to the same period in the prior year. The increase in policy fees was primarily due to higher policy count driven by renewal and new business growth.
•Branch fees for the three months ended June 30, 2026 increased by $0.1 million, or 4.8%, compared to the same period in the prior year. The increase in branch fees was primarily driven by increased agent growth.
•License fees for the three months ended June 30, 2026 increased by $0.3 million, or 47.0%, compared to the same period in the prior year. The increase reflects system developments to support expanded state footprints.
•TPA fees for the three months ended June 30, 2026 decreased by $0.1 million, or 40.8%, compared to the same period in the prior year. The decrease in TPA fees was due to the decreased volume in claims processed by TWFG MGA.
Other income
Other income for the three months ended June 30, 2026 was $0.5 million compared to $0.4 million in the same period in the prior year. The increase was primarily driven by premium financing income.
Commission expense
The following table presents the disaggregation of our commission expense by offerings (in thousands):
| Three Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||
| Agency-in-a-Box | $ | 29,945 | 70 | % | $ | 28,013 | 82 | % | |||||||||||||||
| Corporate Branches | 1,536 | 4 | 1,568 | 5 | |||||||||||||||||||
| Total Insurance Services | 31,481 | 74 | 29,581 | 87 | |||||||||||||||||||
| TWFG MGA | 10,955 | 26 | 4,544 | 13 | |||||||||||||||||||
| Other | 55 | - | 26 | - | |||||||||||||||||||
| Total commission expense | $ | 42,491 | 100 | % | $ | 34,151 | 100 | % | |||||||||||||||
Total commission expense for the three months ended June 30, 2026 increased by $8.3 million, or 24.4% compared to the same period in the prior year. The increase was primarily due to the increased business growth combined with the overall shift in business mix. See commission income discussion above for additional information regarding the driver of changes.
Commission expense for Insurance Services grew by $1.9 million, or 6.4%, for the three months ended June 30, 2026 compared to the same period in the prior year. Agency-in-a-Box commission expense increased by $1.9 million, or 6.9%, for the three months ended June 30, 2026 compared to the same period in the prior year. The increase was primarily driven by the increase in our business. Corporate Branches commission expense for the three months ended June 30, 2026 was comparable to the same period in the prior year. The expenses of our Corporate Branches are primarily salaries and benefits, and are primarily fixed expenses, which are not directly related to commission income or written premium.
TWFG MGA commission expense for the three months ended June 30, 2026 increased by $6.4 million, or 141.1%, compared to the same period in the prior year. The increase is primarily driven by the expansion of TWFG MGA through acquisitions and new agent onboarding, and shift in business composition.
Salaries and employee benefits
Salaries and employee benefits for the three months ended June 30, 2026 increased by $2.3 million, or 24.1%, to $11.8 million compared to the same period in the prior year. The increase was primarily driven by $2.3 million in acquisitions, and a $0.3 million increase in corporate employee growth, offset by a decrease of $0.3 million in stock-based compensation.
Other administrative expenses
Other administrative expenses for the three months ended June 30, 2026 increased by $3.2 million, or 59.0%, to $8.6 million compared to the same period in the prior year. The increase was primarily due to $2.2 million in acquisitions, along with $1.0 million in information technology cost, insurance expense, and other costs associated with the growth of the business.
Depreciation and amortization
Depreciation and amortization for the three months ended June 30, 2026 was $7.1 million compared to $3.9 million in the same period in the prior year, reflecting an increase of $3.2 million, or 81.1%. The increase was primarily due to the amortization of intangible assets from our recent asset acquisitions.
Interest income
Interest income for the three months ended June 30, 2026 was $0.8 million, compared to $1.8 million for the same period in the prior year. The decrease reflects lower average cash balances following capital deployment into acquisitions and share repurchases.
Income tax expense
Income tax expense for the three months ended June 30, 2026 was $1.0 million compared to $0.6 million for the same period in the prior year.
Comparison of the Six Months Ended June 30, 2026 and 2025
Total revenues
The following table presents the disaggregation of our revenues by offerings (in thousands):
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||
| Agency-in-a-Box | $ | 81,324 | 51 | % | $ | 75,312 | 66 | % | |||||||||||||||
| Corporate Branches | 24,988 | 15 | 19,615 | 17 | |||||||||||||||||||
| Total Insurance Services | 106,312 | 66 | 94,927 | 83 | |||||||||||||||||||
| TWFG MGA | 53,020 | 33 | 18,428 | 16 | |||||||||||||||||||
| Other | 1,020 | 1 | 776 | 1 | |||||||||||||||||||
| Total revenues | $ | 160,352 | 100 | % | $ | 114,131 | 100 | % | |||||||||||||||
Total revenues for the six months ended June 30, 2026 increased by $46.2 million, or 40.5%, compared to the same period in the prior year. The $44.3 million, or 42.9%, increase in commission income was driven by written premium growth, continued organic business growth, and acquisitions made in 2025. Also contributing to the increase in total revenues were the $1.2 million, or 18.5%, increase in fee income, $0.4 million, or 11.0%, increase in contingent income, and $0.3 million, or 39.4% 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.
Commission income
The following table presents the disaggregation of our commission income by offerings (in thousands):
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||
| Agency-in-a-Box | $ | 75,954 | 52 | % | $ | 69,634 | 67 | % | |||||||||||||||
| Corporate Branches | 24,324 | 16 | 19,508 | 19 | |||||||||||||||||||
| Total Insurance Services | 100,278 | 68 | 89,142 | 86 | |||||||||||||||||||
| TWFG MGA | 47,416 | 32 | 14,205 | 14 | |||||||||||||||||||
| Total commission income | $ | 147,694 | 100 | % | $ | 103,347 | 100 | % | |||||||||||||||
Commission income for the six months ended June 30, 2026 increased by $44.3 million, or 42.9%, compared to the same period in the prior year. The increase was primarily driven by growth in written premiums, including contributions from the acquisitions of TWFG MGA FL and the APIA MGA programs, which generate higher commission rates, as well as continued organic growth. Corporate store acquisitions completed after June 30, 2025 also contributed to the increase.
Commission income for Insurance Services grew by $11.1 million, or 12.5%, for the six months ended June 30, 2026 compared to the same period in the prior year. Agency-in-a-Box commission income increased by $6.3 million, or 9.1%, for the six months ended June 30, 2026 compared to the same period in the prior year. This increase was driven by higher written premium volume through organic growth and mix in line of business over the period. Corporate Branches commission income increased by $4.8 million, or 24.7%, for the six months ended June 30, 2026 compared to the same period in the prior year. The increase was primarily driven by the acquisitions completed after June 30, 2025 and organic growth.
TWFG MGA commission income for the six months ended June 30, 2026 increased by $33.2 million, or 233.8%, compared to the same period in the prior year. The increase in TWFG MGA was primarily driven by the acquisition of TWFG MGA FL completed in 2025 which contributed $28.2 million to the total increase of $33.2 million.
Contingent income
Contingent income for the six months ended June 30, 2026 was $4.1 million, reflecting a $0.4 million, or 11.0%, increase compared to the same period in the prior year. The increase in contingent income was primarily due to underlying growth in our business. Contingent income is unpredictable and dependent upon the target financial and performance metrics established by the insurance carriers.
Fee income
The following table presents the disaggregation of our fee income by major sources (in thousands):
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Policy fees | $ | 3,101 | 42 | % | $ | 2,134 | 34 | % | |||||||||||||||
| Branch fees | 2,805 | 37 | 2,671 | 42 | |||||||||||||||||||
| License fees | 1,351 | 18 | 1,167 | 18 | |||||||||||||||||||
| TPA fees | 256 | 3 | 368 | 6 | |||||||||||||||||||
| Total fee income | $ | 7,513 | 100 | % | $ | 6,340 | 100 | % | |||||||||||||||
Fee income for the six months ended June 30, 2026 increased by $1.2 million, or 18.5%, compared to the same period in the prior year. Changes to individual components of fee income are discussed in detail below:
•Policy fees for the six months ended June 30, 2026 increased by $1.0 million, or 45.3%, compared to the same period in the prior year. The increase in policy fees was primarily due to higher policy count driven by renewal and new business growth.
•Branch fees for the six months ended June 30, 2026 increased by $0.1 million, or 5.0%, compared to the same period in the prior year. The increase in branch fees was primarily driven by increased agent growth.
•License fees for the six months ended June 30, 2026 increased by $0.2 million, or 15.8%, compared to the same period in the prior year. The increase reflects expanded state footprint and strategic licensing fee adjustments to support agent services.
•TPA fees for the six months ended June 30, 2026 decreased by $0.1 million, or 30.4%, compared to the same period in the prior year. The decrease in TPA fees was due to the decreased volume in claims processed by TWFG MGA.
Other income
Other income for the six months ended June 30, 2026 was $1.0 million compared to $0.7 million in the same period in the prior year. The increase was primarily driven by premium financing income.
Commission expense
The following table presents the disaggregation of our commission expense by offerings (in thousands):
| Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | ||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||
| Agency-in-a-Box | $ | 58,586 | 74 | % | $ | 53,967 | 82 | % | |||||||||||||||
| Corporate Branches | 2,759 | 3 | 2,674 | 4 | |||||||||||||||||||
| Total Insurance Services | 61,345 | 77 | 56,641 | 86 | |||||||||||||||||||
| TWFG MGA | 18,018 | 23 | 9,270 | 14 | |||||||||||||||||||
| Other | 158 | - | 54 | - | |||||||||||||||||||
| Total commission expense | $ | 79,521 | 100 | % | $ | 65,965 | 100 | % | |||||||||||||||
Commission expense for the six months ended June 30, 2026 increased by $13.6 million, or 20.6%, compared to the same period in the prior year. The increase was primarily due to the increased business growth and overall shift in business mix. See commission income discussion above for additional information regarding the driver of changes.
Commission expense for total Insurance Services increased by $4.7 million, or 8.3%, for the six months ended June 30, 2026 compared to the same period in the prior year. Insurance Services Agency-in-a-Box commission expense for the six months ended June 30, 2026 increased by $4.6 million, or 8.6%, compared to the same period in the prior year. The increase was primarily driven by the increase in our business.
Insurance Services Corporate Branches commission expense for the six months ended June 30, 2026 increased by $0.1 million, or 3.2%, compared to the same period in the prior year. The increase in commission expense was driven by both organic business growth and acquisition 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 related to commission income or written premium.
TWFG MGA commission expense for the six months ended June 30, 2026 increased by $8.7 million, or 94.4%, compared to the same period in the prior year. The increase was primarily driven by the acquisitions and overall growth.
Salaries and employee benefits
Salaries and employee benefits for the six months ended June 30, 2026 increased by $4.0 million, or 22.6%, to $21.7 million compared to $17.7 million in the same period in the prior year. The increase was primarily driven by $6.5 million in salaries and employee benefit expenses, acquisitions and increase in corporate employee growth of $0.5 million, offset by a decrease of $2.6 million in stock-based compensation.
Other administrative expenses
Other administrative expenses for the six months ended June 30, 2026 increased by $5.9 million, or 57.8%, to $16.0 million compared to the same period in the prior year. The increase was primarily due to $3.7 million of acquisitions, along with $2.2 million in information technology cost, insurance expense, and other costs associated with the growth of the business.
Depreciation and amortization
Depreciation and amortization for the six months ended June 30, 2026 was $13.2 million compared to $7.3 million in the same period in the prior year, reflecting an increase of $6.0 million, or 82.3%. The increase was primarily due to the amortization of intangible assets from our recent asset acquisitions.
Interest income
Interest income for the six months ended June 30, 2026 was $2.0 million, compared to $3.6 million in the same period in the prior year, reflecting a decrease of $1.6 million. The decrease was attributable to the decline in cash balances which averaged $130.3 million over the six months ended June 30, 2026 compared to $159.8 million operating cash on hand as of June 30, 2025.
Income tax expense
Income tax expense for the six months ended June 30, 2026 was $2.2 million compared to $1.3 million for the same period in the prior year.
Key Performance Indicators
Total Written Premium
Total Written Premium represents, for any reported period, the total amount of current premium (net of cancellation) placed with insurance carriers. We utilize Total Written Premium as a key performance indicator when planning, monitoring and evaluating our performance. We believe Total Written Premium is a useful metric because it is the underlying driver of the majority of our revenue.
The following table presents the disaggregation of Total Written Premium by offerings and business mix and line of business (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Amount | % of Total | Amount | % of Total | Amount | % of Total | Amount | % of Total | ||||||||||||||||||||||||||||||||||||||||
| Offerings: | |||||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Agency-in-a-Box | $ | 324,516 | 57 | % | $ | 293,846 | 65 | % | $ | 602,279 | 59 | % | $ | 543,321 | 66 | % | |||||||||||||||||||||||||||||||
| Corporate Branches | 114,563 | 20 | 95,551 | 21 | 200,340 | 19 | 163,650 | 20 | |||||||||||||||||||||||||||||||||||||||
| Total Insurance Services | 439,079 | 77 | 389,397 | 86 | 802,619 | 78 | 706,971 | 86 | |||||||||||||||||||||||||||||||||||||||
| TWFG MGA | 130,812 | 23 | 60,891 | 14 | 225,491 | 22 | 114,280 | 14 | |||||||||||||||||||||||||||||||||||||||
| Total written premium | $ | 569,891 | 100 | % | $ | 450,288 | 100 | % | $ | 1,028,110 | 100 | % | $ | 821,251 | 100 | % | |||||||||||||||||||||||||||||||
| Business Mix: | |||||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Renewal business | $ | 350,004 | 61 | % | $ | 301,930 | 67 | % | $ | 635,029 | 62 | % | $ | 546,775 | 67 | % | |||||||||||||||||||||||||||||||
| New business | 89,075 | 16 | 87,467 | 19 | 167,590 | 16 | 160,196 | 20 | |||||||||||||||||||||||||||||||||||||||
| Total Insurance Services | 439,079 | 77 | 389,397 | 86 | 802,619 | 78 | 706,971 | 87 | |||||||||||||||||||||||||||||||||||||||
| TWFG MGA | |||||||||||||||||||||||||||||||||||||||||||||||
| Renewal business | 66,771 | 12 | 47,366 | 11 | 122,433 | 12 | 83,741 | 10 | |||||||||||||||||||||||||||||||||||||||
| New business | 64,041 | 11 | 13,525 | 3 | 103,058 | 10 | 30,539 | 3 | |||||||||||||||||||||||||||||||||||||||
| Total TWFG MGA | 130,812 | 23 | 60,891 | 14 | 225,491 | 22 | 114,280 | 13 | |||||||||||||||||||||||||||||||||||||||
| Total written premium | $ | 569,891 | 100 | % | $ | 450,288 | 100 | % | $ | 1,028,110 | 100 | % | $ | 821,251 | 100 | % | |||||||||||||||||||||||||||||||
| Written Premium Retention: | |||||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | 90 | % | 90 | % | 90 | % | 89 | % | |||||||||||||||||||||||||||||||||||||||
| TWFG MGA | 110 | 80 | 107 | 81 | |||||||||||||||||||||||||||||||||||||||||||
| Consolidated | 93 | 89 | 92 | 88 | |||||||||||||||||||||||||||||||||||||||||||
| Line of Business: | |||||||||||||||||||||||||||||||||||||||||||||||
| Personal lines | $ | 457,233 | 80 | % | $ | 365,409 | 81 | % | $ | 831,377 | 81 | % | $ | 663,699 | 81 | % | |||||||||||||||||||||||||||||||
| Commercial lines | 112,658 | 20 | 84,879 | 19 | 196,733 | 19 | 157,552 | 19 | |||||||||||||||||||||||||||||||||||||||
| Total written premium | $ | 569,891 | 100 | % | $ | 450,288 | 100 | % | $ | 1,028,110 | 100 | % | $ | 821,251 | 100 | % | |||||||||||||||||||||||||||||||
The following table presents the dollar and percent change for Total Written Premium by offerings and business mix (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| $ Change | % Change | $ Change | % Change | $ Change | % Change | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| Offerings: | |||||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Agency-in-a-Box | $ | 30,670 | 10.4 | % | $ | 37,643 | 14.7 | % | $ | 58,958 | 10.9 | % | $ | 68,182 | 14.3 | % | |||||||||||||||||||||||||||||||
| Corporate Branches | 19,012 | 19.9 | 17,382 | 22.2 | 36,690 | 22.4 | 27,597 | 20.3 | |||||||||||||||||||||||||||||||||||||||
| TWFG MGA | 69,921 | 114.8 | 1,628 | 2.7 | 111,211 | 97.3 | 10,571 | 10.2 | |||||||||||||||||||||||||||||||||||||||
| Total change in written premium | $ | 119,603 | 26.6 | % | $ | 56,653 | 14.4 | % | $ | 206,859 | 25.2 | % | $ | 106,350 | 14.9 | % | |||||||||||||||||||||||||||||||
| Business Mix: | |||||||||||||||||||||||||||||||||||||||||||||||
| Insurance Services | |||||||||||||||||||||||||||||||||||||||||||||||
| Renewal business | $ | 48,074 | 15.9 | % | $ | 41,809 | 16.1 | % | $ | 88,254 | 16.1 | % | $ | 72,177 | 15.2 | % | |||||||||||||||||||||||||||||||
| New business | 1,608 | 1.8 | % | 13,216 | 17.8 | % | 7,394 | 4.6 | % | 23,602 | 17.3 | % | |||||||||||||||||||||||||||||||||||
| TWFG MGA | |||||||||||||||||||||||||||||||||||||||||||||||
| Renewal business | 19,405 | 41.0 | % | 3,541 | 8.1 | % | 38,692 | 46.2 | % | 4,452 | 5.6 | % | |||||||||||||||||||||||||||||||||||
| New business | 50,516 | 373.5 | % | (1,913) | (12.4) | % | 72,519 | 237.5 | % | 6,119 | 25.1 | % | |||||||||||||||||||||||||||||||||||
| Consolidated Business Mix: | |||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated renewal business | $ | 67,479 | 19.3 | % | $ | 45,350 | 14.9 | % | $ | 126,946 | 15.5 | % | $ | 76,629 | 10.7 | % | |||||||||||||||||||||||||||||||
| Consolidated new business | 52,124 | 51.6 | 11,303 | 12.6 | 79,913 | 9.7 | 29,721 | 4.2 | |||||||||||||||||||||||||||||||||||||||
| Total change in written premium | $ | 119,603 | 26.6 | % | $ | 56,653 | 14.4 | % | $ | 206,859 | 25.2 | % | $ | 106,350 | 14.9 | % | |||||||||||||||||||||||||||||||
Comparison of the Three Months Ended June 30, 2026 and 2025
Total Written Premium for the three months ended June 30, 2026 increased by $119.6 million, or 26.6%, compared to the same period in the prior year. This increase was a result of growth in renewal and new business of $67.5 million, or 19.3%, and $52.1 million, or 51.6%, respectively. Within our Insurance Services offering, renewal business increased $48.1 million, or 15.9%, as compared to $41.8 million, or 16.1%, in the prior year period. New business grew $1.6 million, or 1.8%, as compared to $13.2 million, or 17.8%, in the prior year period. Within our MGA offering, renewal business increased $19.4 million, or 41.0%, as compared to $3.5 million, or 8.1%, in the prior year period. New business grew $50.5 million, or 373.5%, as compared to a decrease of $1.9 million, or 12.4%, in the prior year period.
For the three months ended June 30, 2026 and 2025, our consolidated written premium retention was 93% and 89%, respectively. The increase in retention is correlated to the shift in renewal business growth of $67.5 million, or 19.3%, for the three months ended June 30, 2026, compared to growth of $45.4 million, or 14.9%, in the same period of the prior year. This increase in retention was primarily attributable to the continued expansion of our MGA offerings, and the reduced impact of carrier rate decreases relative to prior periods. Premium retention is calculated based on premium dollars rather than policy counts and is therefore influenced by changes in premium rates, coverage levels, and business mix. Excluding the impacts of TWFG MGA FL, MGA premium retention would have been approximately 71%, and consolidated premium retention would have been approximately 88%, reflecting underlying policy retention trends, a higher mix of new business, and moderating rate increases in the current period
Comparison of the six months ended June 30, 2026 and 2025
Total Written Premium for the six months ended June 30, 2026 increased by $206.9 million, or 25.2%, compared to the same period in the prior year. This increase was a result of growth in renewal and new business of $79.9 million, or 9.7%, and $126.9 million, or 15.5%, respectively. Within our Insurance Services offering, new business grew $7.4 million, or 4.6%, as compared to $23.6 million, or 17.3%, in the prior year period. Renewal business increased $88.3 million, or 16.1%, as compared to $72.2 million, or 15.2%, in the prior year period. Within our MGA offering, new business grew $72.5 million, or 237.5%, as compared to $6.1 million, or 25.1%, in the prior year period. Renewal business increased $38.7 million, or 46.2%, as compared to $4.5 million, or 5.6%, in the prior year period.
For the six months ended June 30, 2026 and 2025, our consolidated written premium retention was 92% and 88%, respectively. The increase in retention is correlated to the shift in renewal business growth of $126.9 million, or 15.5%, for the six months ended June 30, 2026, compared to growth of $76.6 million, or 10.7%, in the same period of the prior year. This increase in retention was primarily attributable to the continued expansion of our MGA offerings, and the reduced impact of carrier rate decreases relative to prior periods.
Non-GAAP Financial Measures
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.
Organic Revenue Growth is the change in Organic Revenue period-to-period, with prior period results adjusted to include revenues that were excluded in the prior period because the relevant acquired businesses had not reached the twelve-month-owned milestone, but have reached the twelve-month owned milestone in the current period. We believe Organic Revenue Growth is an appropriate measure of operating performance because it eliminates the impact of acquisitions, which affects the comparability of results from period-to-period.
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):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Total Revenues | $ | 87,511 | $ | 60,308 | $ | 160,352 | $ | 114,131 | |||||||||||||||
Acquisition adjustments(1) | (6,878) | (1,524) | (21,019) | (2,133) | |||||||||||||||||||
| Contingent income | (2,167) | (2,033) | (4,102) | (3,696) | |||||||||||||||||||
| Fee income | (4,165) | (3,329) | (7,513) | (6,340) | |||||||||||||||||||
| Other income | (536) | (384) | (1,043) | (748) | |||||||||||||||||||
| Policy fee income | 1,698 | 1,082 | 3,101 | 2,134 | |||||||||||||||||||
| Organic Revenue | $ | 75,463 | $ | 54,120 | $ | 129,776 | $ | 103,348 | |||||||||||||||
| Prior year Organic Revenue reported | $ | 54,120 | $ | 48,378 | $ | 103,348 | $ | 89,969 | |||||||||||||||
| Commission income at 12-month post acquisitions | 1,524 | 1,217 | 2,133 | 2,684 | |||||||||||||||||||
| Disposals | (544) | - | (1,065) | - | |||||||||||||||||||
Other adjustments(2) | - | (671) | - | (671) | |||||||||||||||||||
| Organic Revenue denominator | $ | 55,100 | $ | 48,924 | $ | 104,416 | $ | 91,982 | |||||||||||||||
| Organic Revenue | $ | 75,463 | $ | 54,120 | $ | 129,776 | $ | 103,348 | |||||||||||||||
| Organic Revenue denominator | 55,100 | 48,924 | 104,416 | 91,982 | |||||||||||||||||||
| Organic Revenue Growth | $ | 20,363 | $ | 5,196 | $ | 25,360 | $ | 11,366 | |||||||||||||||
Total Revenue Growth Rate(3) | 45.1 | % | 13.8 | % | 40.5 | % | 15.1 | % | |||||||||||||||
Organic Revenue Growth Rate(4) | 37.0 | % | 10.6 | % | 24.3 | % | 12.4 | % | |||||||||||||||
(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.
Comparison of the Three Months Ended June 30, 2026 and 2025
Revenue growth rate, representing the year-over-year change in total revenues, was 45.1% for the three months ended June 30, 2026 compared to the same period in 2025 and 13.8% for the three months ended June 30, 2025 compared to the same period in 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 three months ended June 30, 2026 compared to the same period in 2025 included the continued growth of commission and fee income during the period. See "Consolidated Results of Operations" for additional discussions regarding the changes in our revenues.
Organic Revenue Growth Rate was 37.0% for the three months ended June 30, 2026 compared to the same period in 2025 and 10.6% for the three months ended June 30, 2025 compared to the same period in 2024. 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 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.
Comparison of the Six Months Ended June 30, 2026 and 2025
Revenue growth rate, representing the year-over-year change in total revenues, was 40.5% for the six months ended June 30, 2026 compared to the same period in 2025 and 15.1% for the six months ended June 30, 2025 compared to the same period in 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 six months ended June 30, 2025 compared to the same period in 2024 included the continued growth of commission and fee income during the period. See "Consolidated Results of Operations" for additional discussions regarding the changes in our revenues.
Organic Revenue Growth Rate was 24.3% for the six months ended June 30, 2026 compared to the same period in 2025 and 12.4% for the six months ended June 30, 2025 compared to the same period in 2024. 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 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. 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.
There were no changes to the income tax treatment within the Adjusted Net Income calculation during the three months ended June 30, 2026.
Adjusted Net Income Margin. Adjusted Net Income Margin is Adjusted Net Income divided by total revenues. We believe that Adjusted Net Income Margin is a useful measurement of operating profitability for the same reasons we find Adjusted Net Income useful and in addition, it also provides a period-to-period comparison of our after-tax operating performance.
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):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Total Revenues | $ | 87,511 | $ | 60,308 | $ | 160,352 | $ | 114,131 | |||||||||||||||
| Net Income | $ | 17,251 | $ | 9,000 | $ | 30,330 | $ | 15,853 | |||||||||||||||
| Income tax expense | 1,031 | 620 | 2,164 | 1,276 | |||||||||||||||||||
Acquisition-related expenses | 30 | 19 | 155 | 52 | |||||||||||||||||||
Equity-based compensation | 1,166 | 1,515 | 2,022 | 2,719 | |||||||||||||||||||
Other non-recurring items(1) | - | 10 | 466 | 10 | |||||||||||||||||||
Gain on sale of non-current assets, net(2) | 1 | - | (701) | - | |||||||||||||||||||
| Amortization expense | 6,909 | 3,762 | 12,937 | 6,971 | |||||||||||||||||||
| Adjusted income before income taxes | 26,388 | 14,926 | 47,373 | 26,881 | |||||||||||||||||||
| Adjusted income tax expense | (6,099) | (3,407) | (10,934) | (6,135) | |||||||||||||||||||
| Adjusted Net Income | $ | 20,289 | $ | 11,519 | $ | 36,439 | $ | 20,746 | |||||||||||||||
| Net Income Margin | 19.7 | % | 14.9 | % | 18.9 | % | 13.9 | % | |||||||||||||||
| Adjusted Net Income Margin | 23.2 | % | 19.1 | % | 22.7 | % | 18.2 | % | |||||||||||||||
(1)Non-recurring expense for the six months ended June 30, 2026 relates to the write-off of a commission receivable resulting from a contractual dispute with a carrier that was resolved through commercial concession.
(2)During first and second quarters 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 adjusted in the fourth quarter and full-year 2025 results to conform to the Company's definition of Adjusted Net Income. This adjustment impacts only non-GAAP measures and had no effect on previously reported GAAP results.
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. 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. The most directly comparable GAAP financial metric is diluted earnings per share. We believe Adjusted Diluted Earnings Per Share may be useful to an investor in evaluating our operating performance and efficiency because this measure is widely used by investors to measure a company's operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company-to-company depending upon acquisition activity and capital structure. This measure also eliminates the impact of expenses that do not relate to core business performance, among other factors.
Prior to the IPO and Reorganization Transactions, TWFG Holding's equity structure included common units. The Company considered the calculation of earnings per unit for periods prior to the IPO and determined that such presentation would not provide meaningful information to the users of these Condensed Consolidated Financial Statements. Therefore, earnings per share information for the three and six months ended June 30, 2026 has been calculated solely for the post-IPO period.
A reconciliation of Adjusted Diluted Earnings Per Share to diluted earnings per share, the most directly comparable GAAP measure, for each of the periods indicated is as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Earnings per share of common stock - diluted | $ | 0.18 | $ | 0.13 | $ | 0.29 | $ | 0.22 | |||||||||||||||
Plus: Impact of all LLC Units exchanged for Class A Common Stock(1) | 0.06 | 0.03 | 0.11 | 0.06 | |||||||||||||||||||
Plus: Adjustments to Net Income(2) | 0.06 | 0.04 | 0.11 | 0.09 | |||||||||||||||||||
Plus: Other Adjustments(3) | 0.08 | - | 0.14 | - | |||||||||||||||||||
| Adjusted Diluted Earnings Per Share | $ | 0.38 | $ | 0.20 | $ | 0.65 | $ | 0.37 | |||||||||||||||
| Weighted average common stock outstanding - diluted | 13,096,390 | 56,278,869 | 14,001,518 | 15,083,695 | |||||||||||||||||||
Plus: Impact of all LLC Units exchanged for Class A Common Stock(1) | 41,310,273 | - | 41,292,207 | 41,171,461 | |||||||||||||||||||
| Adjusted Diluted Earnings Per Share diluted share count | 54,406,663 | 56,278,869 | 55,293,725 | 56,255,156 | |||||||||||||||||||
(1) For comparability purposes, this calculation incorporates the net income that would be distributable if all shares of Class B Common Stock and Class C Common Stock, together with the related LLC Units, were exchanged for shares of Class A Common Stock. For the three and six months ended June 30, 2026, this includes $10.5 million and $18.3 million, respectively, of net income on 54,406,663 and 14,001,518 weighted-average shares of common stock outstanding-diluted, respectively. For the three and six months ended June 30, 2025, this includes $7.0 million and $12.6 million, respectively, of net income on 56,278,869 and 56,255,156 weighted-average shares of common stock outstanding-diluted, respectively. For the three and six months ended June 30, 2026, weighted average outstanding Class B Common Stock and Class C Common Stock were considered dilutive and included in the 54,406,663 weighted-average shares of common stock outstanding-diluted within diluted earnings per share calculation. See Note 13 Earnings Per Share to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for more information about the earnings per share.
(2) Adjustments to 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 $17.3 million and Adjusted Net Income of $20.3 million, as well as the net income of $30.3 million and Adjusted Net Income of $36.4 million for the three and six months ended June 30, 2026, respectively. Adjusted Diluted Earnings Per Share include adjustments of $3.0 million to Adjusted Net Income on 54,406,663 weighted-average shares of common stock outstanding-diluted and $6.1 million to Adjusted Net Income on 55,293,725 weighted-average shares of common stock outstanding-diluted, for the three and six months ended June 30, 2026, respectively.
(3) Impact of TWFG MGA FL redeemable noncontrolling interest: Incorporates the net income attributable to the 49.9% interest in TWFG MGA FL, LLC held by AIH Sub, Inc. Unlike the Class B and Class C holders, AIH Sub, Inc. does not hold exchange rights into Class A Common Stock but rather holds a put option exercisable between 2030 and 2033. This component is included to present Adjusted Diluted Earnings Per Share on the same fully consolidated basis as Adjusted EBITDA, ensuring comparability between the two metrics. For the three and six months ended June 30, 2026, this component includes $4.3 million and $7.9 million of net income attributable to AIH Sub, Inc.
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, while excluding the impact of the sale of non-current assets. EBITDA is defined as net income (the most directly comparable GAAP measure) before interest, income taxes, depreciation and amortization. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it adjusts for significant one-time, non-recurring items and eliminates the ongoing accounting effects of certain capital spending and acquisitions, such as depreciation and amortization, that do not directly affect what management considers to be our ongoing operating performance in the period. These adjustments eliminate the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. 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. 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.
Adjusted EBITDA Margin. Adjusted EBITDA Margin is Adjusted EBITDA divided by total revenues. We believe that Adjusted EBITDA Margin is a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA useful and also because it provides a period-to-period comparison of our operating performance.
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):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Total Revenues | $ | 87,511 | $ | 60,308 | $ | 160,352 | $ | 114,131 | |||||||||||||||
Net income | $ | 17,251 | $ | 9,000 | $ | 30,330 | $ | 15,853 | |||||||||||||||
| Interest expense | 57 | 68 | 119 | 151 | |||||||||||||||||||
Interest income(1) | (759) | (1,751) | (1,973) | (3,614) | |||||||||||||||||||
| Depreciation and amortization | 7,065 | 3,901 | 13,234 | 7,260 | |||||||||||||||||||
| Income tax expense | 1,031 | 620 | 2,164 | 1,276 | |||||||||||||||||||
| EBITDA | 24,645 | 11,838 | 43,874 | 20,926 | |||||||||||||||||||
| Acquisition-related expenses | 30 | 19 | 155 | 52 | |||||||||||||||||||
| Equity-based compensation | 1,166 | 1,515 | 2,022 | 2,719 | |||||||||||||||||||
Interest income(1) | 759 | 1,751 | 1,973 | 3,614 | |||||||||||||||||||
Gain on sale of non-current assets, net(2) | 1 | - | (701) | - | |||||||||||||||||||
Other non-recurring items(3) | - | 10 | 466 | 10 | |||||||||||||||||||
| Adjusted EBITDA | $ | 26,601 | $ | 15,133 | $ | 47,789 | $ | 27,321 | |||||||||||||||
| Net Income Margin | 19.7 | % | 14.9 | % | 18.9 | % | 13.9 | % | |||||||||||||||
| Adjusted EBITDA Margin | 30.4 | % | 25.1 | % | 29.8 | % | 23.9 | % | |||||||||||||||
(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 first and 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 adjusted in the fourth quarter and full-year 2025 results to conform to the Company's definition of Adjusted Net Income. This adjustment impacts only non-GAAP measures and had no effect on previously reported GAAP results.
(3)Non-recurring expense for the six months ended June 30, 2026 relates to the write-off of a commission receivable resulting from a contractual dispute with a carrier that was resolved through commercial concession.
Adjusted Free Cash Flow. Adjusted Free Cash Flow is a supplemental measure of our performance. We define Adjusted Free Cash Flow as cash flow from operating activities (the most directly comparable GAAP measure) less cash payments for tax distributions, purchases of property, plant, and equipment and acquisition-related costs. 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 Flow to Cash flow from Operating Activities, the most directly comparable GAAP measures, for each of the periods indicated is as follows (in thousands):
| Three Months Ended June 30, |
Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Cash Flow from Operating Activities | $ | 9,818 | $ | 9,615 | $ | 32,537 | $ | 25,260 | |||||||||||||||
| Purchase of property and equipment | (505) | (44) | (797) | (59) | |||||||||||||||||||
Tax distribution to members(1) | (5,711) | (6,728) | (13,037) | (8,752) | |||||||||||||||||||
Acquisition-related expenses | 30 | 19 | 155 | 52 | |||||||||||||||||||
| Adjusted Free Cash Flow | $ | 3,632 | $ | 2,862 | $ | 18,858 | $ | 16,501 | |||||||||||||||
(1)Tax distributions to members represents the amount distributed to the members of TWFG Holding in respect of their income tax liability related to the net income of TWFG Holding allocated to its members.
Organic Revenue, Organic Revenue Growth, Adjusted Net Income, Adjusted Net Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow and Adjusted Diluted Earnings Per Share are not measures of financial performance under GAAP and should not be considered substitutes for GAAP measures, including revenues (for Organic Revenue and Organic Revenue Growth), net income (for Adjusted Net Income, Adjusted Net Income Margin, Adjusted EBITDA and Adjusted EBITDA Margin), cash flow from operating activities (for Adjusted Free Cash Flow) and diluted earnings per share (for Adjusted Diluted Earnings Per Share), which we consider to be the most directly comparable GAAP measures. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these non-GAAP financial measures in isolation or as substitutes for revenues, net income, operating cash flow or other consolidated financial statement data prepared in accordance with GAAP. Other companies may calculate any or all of these non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.
Liquidity and capital resources
Historical liquidity context
As of June 30, 2026, the Company had $73.7 million in cash and cash equivalents and $19.0 million in restricted cash, compared to $155.9 million and $12.0 million, respectively, as of December 31, 2025. The decrease in cash and cash equivalents for the six months ended June 30, 2026 was primarily attributable to $54.0 million of cash paid for acquisitions, $42.9 million paid for Class A share repurchases of Class A Common Stock, and $18.6 million in member distributions, partially offset by positive cash flows from operations of $32.5 million.
The Company maintains access to the $50.0 million Revolving Facility (as defined below), of which zero was outstanding at June 30, 2026. We were in compliance with all financial covenants under our debt agreements as of the end of the period. Management believes existing liquidity sources, together with cash generated from operations, will be sufficient to meet working capital and capital expenditures for at least the next 12 months.
Credit agreements
On June 5, 2017, TWFG Holding, as borrower, entered into a credit agreement (as subsequently amended, the "Term Loan Credit Agreement") with PNC Bank, National Association, as lender. On July 30, 2019, TWFG Holding entered into a third amendment to the Term Loan Credit Agreement pursuant to which it borrowed $4.0 million pursuant to a Term Loan B and used these proceeds for permitted acquisitions. On December 4, 2020, TWFG Holding entered into a fifth amendment to the Term Loan Credit Agreement pursuant to which it borrowed an additional $13.0 million pursuant to a Term Loan C and used these proceeds for permitted acquisitions (such amount, together with the amount borrowed on July 30, 2019, the "Term Loans"). On May 23, 2023, TWFG Holding entered into a ninth amendment to the Term Loan Credit Agreement to, among other provisions, provide additional flexibility under the covenants contained therein. The Term Loan B was fully repaid by its maturity on July 30, 2024. As of June 30, 2026, $3.0 million remained outstanding under Term Loan C.
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 Rate (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. For the periods ended June 30, 2026 and June 30, 2025, the Revolving Facility had an unutilized capacity of $50.0 million and $50.0 million, respectively.
Each of the Revolving Facility and the term loans 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 June 30, 2026 and June 30, 2025, the Company was in compliance with these covenants. The carrying
amount of the Company's variable rate debt as of June 30, 2026 and June 30, 2025 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. The Term Loans and the Revolving Facility are collateralized by substantially all the Company's assets, which includes rights to future commissions.
Share Repurchase Program
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. As of June 30, 2026, the Company repurchased and retired 2,252,349 shares in the open market for a total cost of $43.3 million, consisting of $42.9 million in cash paid for share repurchases and $0.4 million accrued for excise taxes. As of June 30, 2026, the dollar value of shares that remained available to be purchased under this share buyback program was approximately $7.1 million excluding excise taxes.
Comparative cash flows
The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated (in thousands):
| Six Months Ended June 30, | |||||||||||||||||
| 2026 | 2025 | Variance | |||||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 32,537 | $ | 25,260 | $ | 7,277 | |||||||||||
| Net cash (used in) investing activities from continuing operations | (53,330) | (46,706) | (6,624) | ||||||||||||||
| Net cash (used in) financing activities from continuing operations | (54,356) | (12,876) | (41,480) | ||||||||||||||
| Net change in cash, cash equivalents and restricted cash from continuing operations | (75,149) | (34,322) | (40,827) | ||||||||||||||
| Cash, cash equivalents and restricted cash from continuing operations, beginning of period | 167,900 | 205,323 | (37,423) | ||||||||||||||
| Cash, cash equivalents and restricted cash from continuing operations, end of period | $ | 92,751 | $ | 171,001 | $ | (78,250) | |||||||||||
| Cash paid during the period for interest | $ | 71 | $ | 105 | $ | (34) | |||||||||||
| Cash paid during the period for taxes | $ | 3,060 | $ | - | $ | 3,060 | |||||||||||
Comparison of the Six Months Ended June 30, 2026 and 2025
Operating activities
Operating activities from continuing operations provided $32.5 million and $25.3 million of cash for the six months ended June 30, 2026 and 2025, respectively. The increase in net cash provided by operating activities was driven by a $14.5 million increase in net income, $12.5 million outflow from the change in working capital between periods, which was primarily attributable to the increase in commissions receivable, and $5.3 million in net change of non-cash adjustments in the period which include amortization, stock-based compensation, and non-cash lease expense. See "Consolidated Results of Operations" above for additional information regarding the results of our operations.
Investing activities
Investing activities from continuing operations used $53.3 million and $46.7 million of cash for the six months ended June 30, 2026 and 2025, respectively. Our net investing outflows increased primarily due to the higher level of intangible asset acquisitions in the current period of $53.2 million compared to $47.2 million in the prior period partially offset by $0.7 million inflow from proceeds on the sale of intangible assets. In addition, outflow of $0.8 million for property and equipment acquisitions occurred during the six months ended June 30, 2026. See Note 4 Intangibles, Acquisitions and Disposals to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding our asset acquisitions.
Financing activities
Financing activities from continuing operations used $54.4 million and $12.9 million of cash for the six months ended June 30, 2026 and 2025. Outflows were primarily due to the $42.9 million of repurchased Class A common stock under our share repurchase program, $5.3 million increase in distributions to members, and $0.6 million increase in payments of deferred acquisition payables. The financing outflows are offset by the following inflows of $6.2 million due to net increase in carrier liabilities and $1.1 million decrease related to tax withholding on vesting of equity awards for the three months ended June 30, 2026.
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 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) make payments under the Tax Receivable Agreement, (4) fund acquisitions, (5) pay interest and principal due on borrowings under our Credit Agreements and (6) pay income taxes. 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. 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. Additionally, we may in the future access the capital markets to obtain equity or debt financing, if needed, including to pursue acquisition opportunities.
We have certain obligations related to debt maturities and operating leases. As of June 30, 2026, we had $1.2 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-cancelable operating lease obligations. In addition, as of June 30, 2026, we had $8.8 million of debt maturities for the next 12 months comprised of $2.0 million of the remaining balance under the Term Loan C, and $0.5 million in acquisition-related notes, and $6.3 million of acquisition-related payables. For the periods following the next 12 months, we have an additional $1.4 million of debt maturities representing $1.0 million under the Term Loan C, $0.3 million in acquisition-related notes, and zero of acquisition-related payables. As of June 30, 2026, 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. See Note 6 Debt to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information.
Off-balance sheet arrangements
We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any activities that expose us to any liability that is not reflected in our Condensed Consolidated Financial Statements.
Critical accounting estimates
We prepare our Condensed Consolidated Financial Statements in accordance with GAAP. In applying many of these accounting principles, we need to make assumptions, estimates or judgments that affect the reported amounts of assets, liabilities, revenues, and expenses in our Condensed Consolidated Financial Statements. We base our estimates and judgments on historical experience and other assumptions that we believe are reasonable under the circumstances. These assumptions, estimates or judgments; however, are both subjective and subject to change, and actual results may differ from our assumptions and estimates. If actual amounts are ultimately different from our estimates, the revisions are included in our results of operations for the period in which the actual amounts become known. 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.
There have been no material changes in our critical accounting policies during the six months ended June 30, 2026 as compared to those disclosed in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates" of our Annual Report other than above.
Recent accounting pronouncements
For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2 Summary of Significant Accounting Policies, to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.
Emerging growth company
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and we may remain an emerging growth company for up to five years following the IPO. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved.
Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies.