Executive Summary

Q2 2025 delivered double‑digit growth with revenue up 13.8% to $60.3M, adjusted EBITDA up 40.7% to $15.1M (margin expanded to 25.1%), and adjusted diluted EPS of $0.20, while total written premium rose 14.4% to $450.3M .
Versus consensus: EPS beat (+$0.03 vs $0.17*), but revenue missed ($60.3M vs $63.2M*) as personal lines rates moderated and carrier capacity opened; sequentially, revenue and EBITDA rose vs Q1 *.
Guidance tightened: Organic revenue growth lowered to 11–14% (from 12–16% in Q1), adjusted EBITDA margin raised to 21–23% (from 20–22%), total revenues maintained at $240–$255M .
Catalysts: mix shift toward corporate branches (no commission expense) and interest income on IPO cash boosted margins; a one‑time ~$0.6M gain on sale aided Q2 margin but is non‑recurring .

What Went Well and What Went Wrong

What Went Well

Adjusted EBITDA margin expanded 480 bps YoY to 25.1% on stronger operating leverage; adjusted EBITDA grew 40.7% YoY to $15.1M .
Distribution expansion continued: 4 acquisitions, 9 new branches, and entry into Kentucky; added a new MGA property program in Florida to strengthen the eastern gulf presence .
Management highlighted early AI tooling pilots and scaling labor‑arbitrage via expanding Philippines operations, positioning for further efficiency gains .

What Went Wrong

Revenue missed Street as personal lines rates moderated and competition increased; consolidated written premium retention fell to 89% (vs 93% prior year), reflecting the market’s softening and mix shift toward new business * .
Organic revenue growth slowed to 10.6% (vs 14.3% in Q1 and 20.5% in Q4) amid rate deceleration in several geographies; management trimmed the organic growth outlook to 11–14% .
OpEx stepped up: salaries/benefits +39.3% YoY (RSUs tied to IPO and corporate branch acquisitions) and admin +44.2% YoY (IT, professional fees, integration, public company costs), partially diluting operating income .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$53.0	$53.8	$60.3
Net Income ($USD Millions)	$6.9	$6.9	$9.0
Net Income Margin (%)	13.1%	12.7%	14.9%
Adjusted Net Income ($USD Millions)	$9.8	$9.2	$11.5
Adjusted Net Income Margin (%)	18.5%	17.1%	19.1%
Adjusted EBITDA ($USD Millions)	$10.8	$12.2	$15.1
Adjusted EBITDA Margin (%)	20.3%	22.6%	25.1%
Cash from Operations ($USD Millions)	$7.4	$15.6	$9.6
Adjusted Free Cash Flow ($USD Millions)	$3.7	$13.6	$2.9

EPS vs Estimates and Actuals

Metric	Q1 2025	Q2 2025
Revenue Consensus Mean ($USD)	$53.159M*	$63.239M*
Revenue Actual ($USD)	$53.823M	$60.308M
Primary EPS Consensus Mean ($USD)	$0.146*	$0.172*
EPS Actual (Adjusted/Primary) ($USD)	$0.16	$0.20
EPS – # of Estimates	4*	6*
Revenue – # of Estimates	2*	3*
Values retrieved from S&P Global.*

Segment Revenue Breakdown (Insurance Services vs MGA)

Segment ($USD Millions)	Q2 2024	Q1 2025	Q2 2025
Agency‑in‑a‑Box	$34.4	$36.0	$39.3
Corporate Branches	$9.4	$8.2	$11.4
TWFG MGA	$8.8	$9.2	$9.2
Other	$0.4	$0.4	$0.4
Total Revenues	$53.0	$53.8	$60.3

KPIs

KPI	Q2 2024	Q1 2025	Q2 2025
Total Written Premium ($USD Millions)	$393.6	$371.0	$450.3
Consolidated Retention (%)	93%	88%	89%
Personal Lines ($USD, % of Total)	$322.3, 82%	$298.3, 80%	$365.4, 81%
Commercial Lines ($USD, % of Total)	$71.3, 18%	$72.7, 20%	$84.9, 19%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenues	FY 2025	$240–$255M (raised from $235–$250M in Q4)	$240–$255M	Maintained vs Q1; Raised vs Q4
Organic Revenue Growth Rate	FY 2025	12–16% (raised from 11–16% in Q4)	11–14%	Lowered vs Q1
Adjusted EBITDA Margin	FY 2025	20–22% (raised from 19–21% in Q4)	21–23%	Raised vs Q1

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
AI/Technology efficiency	No explicit AI noted in Q4/Q1 releases; focus on recruiting and margin expansion	Piloting AI tools to reduce manual processes, improve responsiveness; expanding Philippines operations to enhance scalability	Emerging capability; expected to support margin
Market rates/capacity (personal lines)	Q4: hard market; strong organic growth aided by MGA program; Q1: double‑digit organic (14.3%)	Softening rates, expanding carrier capacity; regional deceleration (FL, LA), stability in TX; consolidated retention now 89%	Moderating pricing; more competition; retention normalizing
Commission expense ratio	Q4 branch conversions lowered commission expense growth; corporate branches ramping	Lower commission expense growth (+6.8% YoY) vs income; corporate branches (0% commission expense) mix aided margin	Positive mix shift benefits margins
MGA programs (FICO admitted; Dover Bay E&S)	Q4: MGA uptick aided organic; reinsurance considerations implicit	FICO took rate; growth constrained around 6/1 reinsurance renewal; Dover Bay still growing with geography expansion	Managed growth pacing; potential H2 acceleration
M&A cadence	Q4: modeled $3M rev early, $20M mid‑year; pipeline robust	Continued acquisitions across Q1/Q2; post‑Q2 NY deal; timing implies greater H2 revenue contribution	H2 contribution building
Interest income	Q4 included interest income in adjusted EBITDA; IPO cash generated income	+$1M+ interest income YoY; boosts profitability in quarter	Supportive tailwind

Management Commentary

“Total revenues grew 13.8% year‑over‑year, Organic Revenue grew 10.6% year‑over‑year, and Adjusted EBITDA increased by 40.7%, expanding our Adjusted EBITDA Margin to 25.1%.” — Gordy Bunch, CEO .
“We added nine new branch locations, expanded into Kentucky, and completed four acquisitions, including a new MGA property program in Florida.” — Gordy Bunch .
“Organic revenues increased…for an organic growth rate of 10.6% driven by new business production, normalized retention levels, and moderating rate increases.” — Janice Zwinggi, CFO .
“We are tightening our 2025 guidance…organic revenue growth between 11 to 14%, adjusted EBITDA margin between 21–23%, and reaffirming total revenues between $240M and $255M…well capitalized with ~$160M cash.” — Gordy Bunch .

Q&A Highlights

Margin drivers: Commission expense growth of 6.8% lagged commission income; corporate branch acquisitions (0% commission expense) and higher‑than‑modeled margins in acquired locations expanded profitability .
Non‑recurring items: ~$0.6M gain on sale lifted Q2 margin; management cautioned against annualizing the 25.1% margin .
Organic growth dynamics: Mix shift toward new business offsets retention normalization (93% → 89%); management still sees double‑digit organic growth forward despite price moderation .
MGA/regional: FICO (admitted TX program) growth constrained around reinsurance renewal; Dover Bay (E&S) continues to grow with potential geographic expansion .
M&A timing: Sequential closings (Apr/May/Jun and post‑Q2 NY) suggest H2 revenue accretion vs H1 .

Estimates Context

Q2 2025: EPS beat — $0.20 actual vs $0.17 consensus*; Revenue miss — $60.3M actual vs $63.2M consensus*. Sequentially, Q1 2025 EPS $0.16 vs $0.15 consensus* and revenue $53.8M vs $53.2M consensus*. Values retrieved from S&P Global.*
Potential estimate revisions: Margin outlook raised (21–23% vs 20–22% prior) despite lower organic growth range (11–14% vs 12–16% prior); Street may lift EBITDA margin assumptions and trim organic revenue growth trajectory for H2 .

Key Takeaways for Investors

EPS beat and margin expansion were driven by corporate branch mix and interest income; one‑time gain contributed modestly — expect margins within guided 21–23% rather than Q2’s 25.1% run‑rate .
Revenue miss reflects rate moderation and increased competition; however, expanding carrier capacity is enabling new business growth to sustain double‑digit organic trajectory within the tighter 11–14% range .
H2 setup: Acquisitions closed across Q1/Q2 and post‑Q2 should contribute more meaningfully in H2; watch for MGA program growth resuming post reinsurance renewal and relaxed guidelines .
Capital position is strong: ~$160M cash and full revolver availability support continued M&A, recruiting, and technology investments — a buffer amidst market normalization .
Execution levers: Early AI deployments and offshore operations expansion offer incremental efficiency and scalability, supporting medium‑term margin expansion initiatives .
Trading lens: Near‑term stock reactions likely hinge on narrative of “quality beat despite revenue miss,” guidance rebalancing (lower organic/ higher margin), and confirmation of H2 M&A contribution.
Medium‑term thesis: Continued network expansion, corporate branch mix, and MGAs plus disciplined M&A, underpinned by strong liquidity, support sustained margin improvement and organic growth normalization.

Citations: Q2 2025 8‑K press release and exhibits ; Q2 2025 earnings call transcript ; Q1 2025 8‑K ; Q4 2024 8‑K . Values retrieved from S&P Global where marked with an asterisk.*

TWFG, Inc. (TWFG)·Q2 2025 Earnings Summary