Core Viewpoint - Insperity, Inc. is under investigation for potential securities fraud and unlawful business practices following a significant decline in its financial performance and stock price [1][3]. Financial Performance - On August 1, 2025, Insperity reported adjusted earnings per share of $0.26 for Q2 2025, which was a 70% decline year-over-year and below analyst expectations [3]. - The company attributed its poor performance to higher-than-expected benefits costs, particularly due to rising pharmacy expenses and an increase in large insurance claims [3]. - Following the earnings announcement, Insperity's stock price dropped by $14.51, or 24.35%, closing at $45.07 per share [4]. Legal Investigation - Pomerantz LLP is investigating claims on behalf of Insperity investors regarding possible securities fraud or other unlawful business practices by the company and its officers or directors [1].

Core Viewpoint - Insperity, Inc. is under investigation for possible securities fraud following disappointing financial results, which has led to a significant decline in its stock price [1][3][4]. Financial Performance - Insperity reported adjusted earnings per share of $0.26 for Q2 2025, which was a 70% decline compared to the same period in the previous year [3]. - The company attributed the poor performance to higher-than-expected benefits costs, including increased pharmacy expenses and a rise in large insurance claims [3]. - Following the earnings announcement, Insperity's stock price fell by $14.51, or approximately 24.35%, closing at $45.07 per share on August 1, 2025 [4]. Legal Actions - The Portnoy Law Firm has initiated an investigation into Insperity and may file a class action on behalf of investors who suffered losses [1]. - Investors are encouraged to contact the law firm for a complimentary case evaluation and to discuss their legal rights [2].

Core Insights - Insperity reported a significant decline in profitability in Q2 2025 despite stable revenue growth, with non-GAAP EPS dropping to $0.26, missing analyst estimates of $0.41 [1][6] - Revenue for the quarter was $1.7 billion, exceeding projections and reflecting a 3% year-over-year increase, driven by a modest rise in average paid worksite employees [1][5] - The company faced heavy margin pressure due to rising healthcare costs, resulting in a net loss of $5 million compared to a net income of $18 million in Q2 2024 [1][6] Financial Performance - Non-GAAP EPS fell by 70% year-over-year from $0.86 to $0.26 [2] - Adjusted EBITDA decreased by 52% to $32 million from $66 million [2] - Gross profit declined by 14% to $223 million [2] - Average worksite employees increased by 1% to 309,115 [2] Business Overview - Insperity operates as a professional employer organization (PEO), providing HR solutions including payroll, employee benefits, and regulatory compliance management [3] - The company emphasizes a high-touch and technology-enabled experience for its clients [3] Strategic Focus - Recent initiatives include expanding HR technology offerings, enhancing operational efficiency, and leveraging scale for competitive benefits [4] - Insperity's Certified Professional Employer Organization (CPEO) status aids in regulatory compliance and client eligibility for tax credits [4] Revenue and Margin Insights - Revenue growth was supported by effective pricing strategies, even amid subdued macroeconomic sentiment among small and medium-sized businesses [5] - Management noted that rising healthcare costs were driven by elevated pharmacy trends and large claim activity, severely impacting margins [6] Cost Management and Future Outlook - Management is implementing new pricing and benefit plan designs to mitigate cost inflation, with expectations for improvements in 2026 [7][10] - Insperity invested $14 million in Q2 2025 and $27 million in the first half of 2025 to advance its partnership with Workday, focusing on technology-driven HR solutions [8] - The company maintained cost discipline, with operating expenses declining by 3% despite ongoing investments [9] Guidance and Projections - For fiscal 2025, management revised guidance for adjusted EPS to a range of $1.81 to $2.51, a reduction of 30% to 49% compared to the previous year [10] - Adjusted EBITDA is expected to range from $170 million to $205 million, down between 24% and 37% [10] - Q3 2025 guidance indicates continued pressures, with adjusted EPS forecast between $0.06 and $0.49 [10]

[Part I - Financial Information](index=6&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) Financial statements for H1 2025 show 3% revenue growth but significant profitability decline, with a $5 million Q2 net loss and $522 million cash used in operations due to tax payments and client credit distributions [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (as of June 30, 2025 vs. Dec 31, 2024) | Account | June 30, 2025 (in millions) | December 31, 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $441 | $1,039 | ▼ $598 | | Total current assets | $1,517 | $2,085 | ▼ $568 | | Total assets | $2,018 | $2,597 | ▼ $579 | | Payroll taxes and other payroll deductions payable | $366 | $901 | ▼ $535 | | Total current liabilities | $1,357 | $1,930 | ▼ $573 | | Total stockholders' equity | $112 | $97 | ▲ $15 | [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) Income Statement Highlights (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,658 | $1,605 | $3,521 | $3,407 | | Gross Profit | $223 | $260 | $533 | $605 | | Operating Income (Loss) | $(7) | $23 | $61 | $131 | | Net Income (Loss) | $(5) | $18 | $46 | $97 | | Diluted EPS | $(0.14) | $0.48 | $1.22 | $2.56 | - For the second quarter of 2025, the company experienced a **128% decrease** in net income, resulting in a net loss of **$5 million**, compared to a net income of **$18 million** in Q2 2024. For the six months ended June 30, 2025, net income decreased by **53%** year-over-year[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(522) | $51 | | Net cash used in investing activities | $(11) | $(11) | | Net cash used in financing activities | $(78) | $(127) | - Net cash used in operating activities was **$522 million** for the first six months of 2025, a significant decline from the **$51 million** provided by operating activities in the same period of 2024. This was primarily driven by changes in operating liabilities, particularly a **$535 million** decrease in 'Payroll taxes and other payroll deductions payable'[14](index=14&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies, particularly for health insurance and workers' compensation costs, which involve significant estimates. They also provide breakdowns of revenue by region, details on long-term debt, share repurchase activities, and highlight a subsequent event regarding new federal tax legislation (H.R.1) whose impact is still under evaluation - The company's PEO HR Solutions revenue is primarily derived from gross billings based on WSEE payroll costs plus a markup. Revenue is recognized ratably over the payroll period[36](index=36&type=chunk)[37](index=37&type=chunk) - As of June 30, 2025, the company had an outstanding balance of **$369 million** on its revolving credit facility, with an available borrowing capacity of **$280 million**[50](index=50&type=chunk) - Subsequent to the quarter end, on July 4, 2025, a new federal law, H.R.1 ("One Big Beautiful Bill Act"), was enacted. The company is currently evaluating the potential effects of this law on its financial position and results[60](index=60&type=chunk)[61](index=61&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes H1 2025 revenue growth to WSEE and pricing, but gross profit declined 12% due to higher benefits costs, and liquidity was impacted by significant cash use from operations [Executive Summary](index=26&type=section&id=Executive%20Summary) Q2 2025 vs Q2 2024 Highlights | Metric | Change | | :--- | :--- | | Average WSEEs paid per month | ▲ 1% | | Net Income (Loss) | ▼ 128% to $(5)M | | Diluted EPS | ▼ 129% to $(0.14) | | Adjusted EBITDA | ▼ 52% to $32M | First Six Months 2025 vs 2024 Highlights | Metric | Change | | :--- | :--- | | Average WSEEs paid per month | ▲ 1% | | Net Income | ▼ 53% to $46M | | Diluted EPS | ▼ 52% to $1.22 | | Adjusted EBITDA | ▼ 36% to $134M | [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Revenues increased by 3% for both Q2 and the first six months of 2025, driven by a 1% growth in average WSEEs and a 3% increase in pricing. This was more than offset by a significant decline in gross profit, which fell 14% in Q2 and 12% year-to-date. The decline was primarily caused by higher benefits costs per WSEE, stemming from elevated pharmacy trends and large claim activity. Operating expenses remained relatively flat - Average WSEEs paid increased by **1%** in both Q2 and the first six months of 2025 compared to the prior year periods[71](index=71&type=chunk) - Gross profit per WSEE per month for Q2 2025 decreased by **$42 (15%) to $240**, primarily due to higher direct costs, especially benefits costs, which increased by **$65 per WSEE per month**[95](index=95&type=chunk)[97](index=97&type=chunk)[100](index=100&type=chunk) - The increase in benefits costs was driven by elevated pharmacy trends and a higher frequency of large claims in Q2 2025. Additionally, Q2 2024 benefited from a **$25 million decrease** in costs from changes in estimated claims run-off, a benefit that did not recur in Q2 2025[100](index=100&type=chunk) - Total operating expenses for Q2 2025 decreased by **3% to $230 million**, mainly due to a 14% reduction in general and administrative expenses[113](index=113&type=chunk) [Non-GAAP Financial Measures](index=44&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures such as Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS to provide insight into its core operating performance by excluding items like non-cash stock-based compensation. For Q2 2025, Adjusted EBITDA decreased **52% to $32 million**, and Adjusted EPS decreased **70% to $0.26** Reconciliation of Net Income (Loss) to Adjusted EBITDA (in millions) | Line Item | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(5) | $18 | $46 | $97 | | Adjustments (Taxes, Interest, D&A, etc.) | $17 | $28 | $57 | $81 | | EBITDA | $12 | $46 | $103 | $178 | | Stock-based compensation | $20 | $20 | $31 | $30 | | **Adjusted EBITDA** | **$32** | **$66** | **$134** | **$208** | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily supported by cash from operations and a $650 million revolving credit facility, of which $280 million was available at quarter-end. Net cash used in operating activities was $522 million for the first six months of 2025, a stark contrast to the $51 million generated in the prior year. This was largely due to the timing of payroll tax payments and the distribution of $440 million in client employee retention tax credits received in late 2024 - As of June 30, 2025, the company had **$456 million** in cash, cash equivalents, and marketable securities, and working capital of **$160 million**[127](index=127&type=chunk) - The significant use of cash from operations in the first six months of 2025 was heavily influenced by the distribution of **$440 million** of client employee retention tax credits that had been received from the IRS in Q4 2024[129](index=129&type=chunk) - During the first six months of 2025, the company used **$45 million** for dividends and **$19 million** for stock repurchases and withholdings[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate fluctuations, impacting income on investments and expense on its **$370 million** variable-rate credit facility borrowings - The company is exposed to market risks from interest rate fluctuations, which impact its short-term investments and borrowings under its variable-rate credit facility[134](index=134&type=chunk) - As of June 30, 2025, borrowings and letters of credit outstanding under the facility totaled **$370 million**[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[137](index=137&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[138](index=138&type=chunk) [Part II - Other Information](index=51&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various lawsuits in the normal course of business but does not believe the outcomes will have a material adverse effect on its financial position - The company is a defendant in various lawsuits arising in the normal course of business and believes the final outcome will not have a material adverse effect[58](index=58&type=chunk)[139](index=139&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred in the company's risk factors since its 2024 Annual Report on Form 10-K[140](index=140&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company withheld **802 shares** for tax obligations from restricted stock vesting, but made no program repurchases, leaving **1,407,764 shares** available Share Purchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased Under Program | | :--- | :--- | :--- | :--- | | April 2025 | 548 | $84.65 | 0 | | May 2025 | 254 | $66.79 | 0 | | June 2025 | 0 | N/A | 0 | | **Total** | **802** | **$78.99** | **0** | - The **802 shares** purchased during the quarter were withheld to satisfy tax-withholding obligations from vesting restricted stock units and were not part of the formal repurchase program[141](index=141&type=chunk) - As of June 30, 2025, the company was authorized to repurchase an additional **1,407,764 shares** under its existing program[141](index=141&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, none of the company's directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2025[142](index=142&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files

Core Insights - Insperity, Inc. reported quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.41 per share, and down from $0.86 per share a year ago, representing an earnings surprise of -36.59% [1] - The company posted revenues of $1.66 billion for the quarter ended June 2025, slightly missing the Zacks Consensus Estimate by 0.54%, and showing a year-over-year increase from $1.61 billion [2] - Insperity shares have declined approximately 23.1% year-to-date, contrasting with the S&P 500's gain of 7.8% [3] Company Performance - Over the last four quarters, Insperity has surpassed consensus EPS estimates two times and topped consensus revenue estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is $0.33 on revenues of $1.62 billion, and for the current fiscal year, it is $2.48 on revenues of $6.84 billion [7] Industry Context - The Staffing Firms industry, to which Insperity belongs, is currently ranked in the bottom 26% of over 250 Zacks industries, indicating potential challenges for performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Insperity's stock performance [5][6]

Financial Data and Key Metrics Changes - The company reported Q2 2025 EPS of $0.26 and adjusted EBITDA of $32 million, slightly below the forecasted range due to higher than expected benefits costs [5][6] - Average paid worksite employees increased by 0.7% year-over-year to 309,115, with new sales contributing to a 2% increase in worksite employees [5][6] - Gross profit per worksite employee decreased to $240 per month from $282 in Q2 2024, primarily due to increased benefits costs [6][9] Business Line Data and Key Metrics Changes - Client retention averaged 99% per month, consistent with prior year results, while net hiring within the client base showed slight improvement [5][6] - Benefits costs per covered employee increased by 9.6% year-over-year in Q2, with pharmacy costs being a significant contributor [8][9] Market Data and Key Metrics Changes - The company noted that large claim frequency remains elevated, particularly for cancer and heart-related conditions, but did not observe adverse selection among new clients [8][9] - The overall economic environment for small and medium-sized businesses is showing signs of stabilization, which may lead to improved hiring trends [26][30] Company Strategy and Development Direction - The company is focused on executing a pricing plan and implementing plan design changes to address elevated benefits cost trends [34][30] - A strategic partnership with Workday is being leveraged to enhance HR solutions, with a new product architecture aimed at expanding the total addressable market [17][19] - The company plans to launch a fall sales campaign earlier than previous years, with strong incentives to drive sales and retention [25][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving accelerated growth and improved profitability in 2026 despite current challenges [14][30] - The company is optimistic about the potential for recovery in gross profit margins and operating expense management [27][30] Other Important Information - Operating expenses decreased by 3% year-over-year, with significant reductions in travel and professional fees [12] - The company returned $22 million in cash dividends to shareholders during Q2 2025, with a total of $45 million year-to-date [12] Q&A Session Summary Question: What is the expected financial impact of the Workday partnership in 2026? - Management indicated it is too early to predict the exact revenue and profitability impact from the Workday partnership, but they are excited about the progress [38][39] Question: Has there been improvement in net client hiring? - Management noted that underlying hiring has improved, although it remains below historical levels, and they expect further improvement [44][46] Question: Is the $150 million investment in Workday still appropriate? - Management believes the investment will exceed $150 million over five years, but the impact on the income statement will reduce significantly as they move closer to launch [49][50] Question: How will pricing and plan design changes affect healthcare costs? - Management stated that pricing changes will be the primary method to manage rising healthcare costs, with plan design changes serving to limit overall cost trends [67][68] Question: When will broad marketing efforts for Workday begin? - Management indicated that broad marketing efforts will likely occur in 2026, following the beta testing phases [71][72]

Financial Data and Key Metrics Changes - The company reported Q2 2025 EPS of $0.26 and adjusted EBITDA of $32 million, slightly below the forecasted range due to higher than expected benefits costs [5][6] - Average paid worksite employees increased by 0.7% year-over-year to 309,115, with new sales contributing to a 2% increase in worksite employees [5][6] - Gross profit per worksite employee decreased to $240 per month from $282 in 2024, primarily due to increased benefits costs [6][7] - Benefits costs per covered employee increased by 9.6% year-over-year in Q2 and by 9% year-to-date [7][8] Business Line Data and Key Metrics Changes - Client renewals averaged 99% per month, consistent with prior year results, indicating strong client retention [5][6] - Net hiring within the client base showed improvement, slightly exceeding expectations and Q2 2024 levels, but still below historical norms [6][7] Market Data and Key Metrics Changes - The company noted that large claim frequency remains elevated, particularly for cancer and heart-related conditions, but did not observe adverse selection among new clients [7][8] - The overall economic environment for small and medium-sized businesses is showing signs of stabilization, which may lead to improved hiring trends [25][28] Company Strategy and Development Direction - The company is focused on executing plans to improve profitability in 2026 through pricing increases, plan design changes, and contract negotiations with UHC [9][10] - A new HR solution portfolio was announced, including Insperity HR 360, Insperity HR Core, and Insperity HR Scale, aimed at expanding the total addressable market [17][18] - The company is investing in AI capabilities to enhance service delivery and operational efficiency [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving accelerated growth and improved profitability in 2026 despite current challenges [14][25] - The company is optimistic about the potential for recovery in gross profit margins and operating expense management [26][30] - Recent federal legislation is seen as a catalyst for expansion in the SMB community, potentially improving hiring trends [25][28] Other Important Information - Operating expenses decreased by 3% year-over-year, with significant reductions in travel and professional fees [12] - The company returned $22 million in cash dividends to shareholders during the quarter and repurchased 224,000 shares at a cost of $19 million [12] Q&A Session Summary Question: Financial impact of Workday partnership in 2026 - Management indicated it is too early to predict the exact revenue and profitability impact from the Workday partnership, but they are excited about the progress [35][36] Question: Net client hiring dynamics - There has been an improvement in underlying hiring levels, although still below historical norms, with expectations for continued improvement [42][43] Question: Investment visibility and expenses related to Workday - The original $150 million investment is still considered appropriate, with expectations that some expenses will become capitalizable as the product nears launch [47][48] Question: Healthcare cost management strategies - Pricing changes are the primary method to manage rising healthcare costs, with plan design changes and contract negotiations as secondary strategies [65][66] Question: Timing for broader marketing efforts - Broader marketing efforts are expected to ramp up in 2026, following the beta testing phases [71][72]

Q2 2025 Financial Performance - Average paid worksite employees increased by 1%[10] - Worksite employees paid from new client sales increased by 2% compared to Q2 2024[10] - Adjusted EBITDA decreased by 52%[14] - Adjusted EPS decreased by 70%[14] - Operating expenses decreased by 3% compared to Q2 2024[14] YTD June 2025 Financial Performance - Average paid worksite employees increased by 1%[17] - Worksite employees paid from new client sales increased by 2% compared to 2024[17] - Adjusted EBITDA decreased by 36%[20] - Adjusted EPS decreased by 42%[20] 2025 Outlook - The company expects average WSEEs paid to be between 310,300 and 313,400, representing a year-over-year increase of 1% to 2%[25] - The company expects adjusted EPS to be between $181 and $251, representing a year-over-year decrease of 49% to 30%[25] - The company expects adjusted EBITDA to be between $170 million and $205 million, representing a year-over-year decrease of 37% to 24%[25]

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Insperity's Q2 2025 revenue grew 3% to $1.7 billion, but higher benefits costs led to a 14% gross profit decrease and a $5 million net loss, with year-to-date net income down 53% Q2 2025 Key Metrics vs. Q2 2024 (in millions, except WSEEs and EPS) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Average Paid WSEEs | 309,115 | 306,958 | +1% | | Revenues | $1.7 billion | $1.605 billion | +3% | | Gross Profit | $223 million | $260 million | -14% | | Net Income (Loss) | ($5 million) | $18 million | -128% | | Diluted EPS | ($0.14) | $0.48 | -129% | | Adjusted EBITDA | $32 million | $66 million | -52% | | Adjusted EPS | $0.26 | $0.86 | -70% | Year-to-Date (YTD) 2025 Key Metrics vs. YTD 2024 (in millions, except WSEEs and EPS) | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Average Paid WSEEs | 307,569 | 305,431 | +1% | | Revenues | $3.5 billion | $3.407 billion | +3% | | Gross Profit | $533 million | $605 million | -12% | | Net Income | $46 million | $97 million | -53% | | Diluted EPS | $1.22 | $2.56 | -52% | | Adjusted EBITDA | $134 million | $208 million | -36% | | Adjusted EPS | $1.83 | $3.13 | -42% | - The primary reason for the **14% decrease** in Q2 gross profit was higher-than-expected benefits costs, driven by elevated pharmacy trends and a high frequency of large healthcare claims[4](index=4&type=chunk) - During the first six months of 2025, Insperity returned **$64 million** to shareholders, consisting of **$19 million** in share repurchases (225,000 shares) and **$45 million** in cash dividends[8](index=8&type=chunk)[10](index=10&type=chunk) [Business Outlook & Strategy](index=1&type=section&id=Business%20Outlook%20%26%20Strategy) Management is implementing pricing and benefit plan changes to address rising costs and drive accelerated growth in 2026, with a Workday partnership beta launch planned for early next year, despite reduced 2025 guidance - Management is executing a plan focused on pricing adjustments and benefit plan design changes to address the elevated benefits cost trend and lay the foundation for **accelerated growth in 2026**[4](index=4&type=chunk)[6](index=6&type=chunk) - The strategic partnership with Workday, named "**Insperity HRScale**," has a targeted go-live date with beta clients early next year, and sales and marketing efforts have already commenced[4](index=4&type=chunk) Updated 2025 Guidance | Metric | Q3 2025 Guidance | Full Year 2025 Guidance | | :--- | :--- | :--- | | Avg. WSEEs Paid (YoY Growth) | 312,200 - 315,300 (1% - 2%) | 310,300 - 313,400 (1% - 2%) | | Adjusted EPS (YoY Change) | $0.06 - $0.49 ( (85)% - 26% ) | $1.81 - $2.51 ( (49)% - (30)% ) | | Adjusted EBITDA (YoY Change) | $24M - $44M ( (38)% - 13% ) | $170M - $205M ( (37)% - (24)% ) | [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) This section presents Insperity's unaudited consolidated financial statements as of June 30, 2025, reflecting revenue growth offset by increased costs and lower profitability [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $2.02 billion due to lower cash, while total liabilities also fell to $1.91 billion, and stockholders' equity rose to $112 million Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $441 | $1,039 | | Total current assets | $1,517 | $2,085 | | **Total assets** | **$2,018** | **$2,597** | | **Liabilities & Equity** | | | | Total current liabilities | $1,357 | $1,930 | | Long-term debt | $369 | $369 | | **Total liabilities** | **$1,906** | **$2,500** | | **Total stockholders' equity** | **$112** | **$97** | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 revenues rose 3% to $1.66 billion, but a 7% cost increase led to a 14% gross profit decline, resulting in a $7 million operating loss and a $5 million net loss for the quarter Statement of Operations Summary (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,658 | $1,605 | $3,521 | $3,407 | | Gross Profit | $223 | $260 | $533 | $605 | | Operating Income (Loss) | ($7) | $23 | $61 | $131 | | Net Income (Loss) | ($5) | $18 | $46 | $97 | [Key Financial and Statistical Data](index=9&type=section&id=Key%20Financial%20and%20Statistical%20Data) Q2 2025 per WSEE per month, revenues increased 3% to $1,788, but gross profit declined 15% to $240, and operating income shifted to an $8 loss, indicating significant margin compression Key Metrics Per WSEE Per Month | Metric | Q2 2025 ($) | Q2 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $1,788 | $1,743 | +3% | | Gross profit | $240 | $282 | -15% | | Operating income (loss) | ($8) | $25 | -132% | [Non-GAAP Financial Measures & Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines and reconciles non-GAAP financial measures like Adjusted EBITDA and Adjusted EPS, providing greater transparency into core operational performance by excluding non-cash items - The company uses non-GAAP measures like **Adjusted EBITDA** and **Adjusted EPS** to provide investors with a view of performance similar to that used by management, primarily by excluding non-cash stock-based compensation[24](index=24&type=chunk)[25](index=25&type=chunk) Reconciliation of Net Income (Loss) to Adjusted EBITDA (in millions) | Line Item | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net income (loss) (GAAP)** | **($5)** | **$18** | **$46** | **$97** | | Adjustments (Taxes, Interest, D&A, etc.) | $17 | $28 | $57 | $81 | | **EBITDA** | **$12** | **$46** | **$103** | **$178** | | Stock-based compensation | $20 | $20 | $31 | $30 | | **Adjusted EBITDA (Non-GAAP)** | **$32** | **$66** | **$134** | **$208** | Reconciliation of Diluted EPS to Adjusted EPS | Line Item | Q2 2025 ($) | Q2 2024 ($) | YTD 2025 ($) | YTD 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | **Diluted EPS (GAAP)** | **($0.14)** | **$0.48** | **$1.22** | **$2.56** | | Non-GAAP adjustments, net | $0.40 | $0.38 | $0.61 | $0.57 | | **Adjusted EPS (Non-GAAP)** | **$0.26** | **$0.86** | **$1.83** | **$3.13** | Reconciliation of 2025 Guidance (GAAP to Non-GAAP) | Metric | Q3 2025 Guidance ($) | Full Year 2025 Guidance ($) | | :--- | :--- | :--- | | **Diluted EPS (GAAP)** | **$(0.25) - $0.18** | **$0.59 - $1.29** | | Total non-GAAP adjustments, net | $0.31 | $1.22 | | **Adjusted EPS (Non-GAAP)** | **$0.06 - $0.49** | **$1.81 - $2.51** | [Other Information](index=3&type=section&id=Other%20Information) This section provides administrative and legal information, including conference call details, a corporate overview, and a safe harbor statement regarding forward-looking statements and associated risks [Conference Call and Webcast](index=3&type=section&id=Conference%20Call%20and%20Webcast) Insperity held a conference call and webcast on August 1, 2025, at 8:30 a.m. ET to discuss Q2 results and updated 2025 guidance, with replay options available - A conference call was held at 8:30 a.m. ET on the day of the release to discuss results and guidance, with details provided for live access and replay[15](index=15&type=chunk) [About Insperity](index=3&type=section&id=About%20Insperity) Insperity offers comprehensive HR solutions, combining service and technology to provide administrative relief and improved benefits, generating $6.6 billion in 2024 revenues with over 100 U.S. sales offices - Insperity offers comprehensive HR solutions to businesses, focusing on driving performance and growth. The company had 2024 revenues of **$6.6 billion** and operates over 100 sales offices in the U.S[16](index=16&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This standard disclaimer cautions that forward-looking statements are subject to various risks, including economic conditions, healthcare costs, competition, and the Workday partnership, which could cause actual results to differ materially - The report contains forward-looking statements that are subject to risks and uncertainties. Key risk factors include: - Adverse economic conditions - Increases in health insurance and workers' compensation costs - Competition in the HR services industry - Ability to realize benefits from the strategic partnership with Workday, Inc - Disruptions of IT systems or data security breaches[17](index=17&type=chunk)[20](index=20&type=chunk)

Insperity, Inc. (NSP) Q1 2025 Results Summary Core Viewpoint - Insperity, Inc. reported lower-than-expected first-quarter 2025 results, leading to a 17% decline in stock price since the earnings release on April 29 due to disappointing earnings and weak EPS guidance [1] Financial Performance - Adjusted earnings per share (EPS) were 1.57 cents, missing the consensus estimate by 21.9% and decreasing 30.8% year over year [2] - Revenues totaled $1.9 billion, slightly missing the Zacks Consensus Estimate but increasing 3.4% from the previous year [2] - Gross profit declined 10% year over year to $310 million, with a gross margin of 16.6%, down 250 basis points from Q1 2024 [4] - Operating income fell 37% year over year to $68 million, with operating income per worksite employee (WSEE) per month at $74 compared to $118 in the prior year [5] Employee Metrics - The average number of worksite employees paid per month increased by 1% year over year to 306,023 [3] - Revenue per worksite employee (WSEE) per month rose 3% from the year-ago quarter to $2,029 [3] Guidance and Outlook - For 2025, the adjusted EPS guidance was lowered to $2.23-$3.28 from the previous range of $3.10-$3.95, with the mid-point of $2.76 exceeding the Zacks Consensus Estimate of $2.48 [1] - Q2 guidance for EPS is set at 29-67 cents per share, with the mid-point of 48 cents above the Zacks Consensus Estimate of 41 cents [7] - Adjusted EBITDA guidance for 2025 was reduced to $190-$245 million from $240-$285 million [7] Balance Sheet and Cash Flow - As of the end of Q1 2025, cash and cash equivalents stood at $551 million, down from $1 billion in the previous quarter [6] - Long-term debt remained flat at $369 million, and the company distributed $23 million in cash dividends during the quarter [6]