Company Operations - As of December 31, 2024, the company serviced an average of 309,093 worksite employees (WSEEs) per month through its regional service centers[16]. - The company operates 83 physical office locations across 48 markets, enhancing its service delivery capabilities[16]. - The company has 106 sales offices located in 48 markets as of December 31, 2024[56]. - The company serves clients and WSEEs throughout the United States, targeting businesses with approximately 10 to 5,000 employees[50]. - The company has four regional service centers servicing approximately 34%, 22%, 23%, and 21% of its WSEE base, respectively[170][171]. Service Offerings - The PEO HR Outsourcing Solutions are designed to relieve small and medium-sized businesses of administrative burdens, allowing them to focus on core competencies[14]. - The company’s Workforce Optimization solution is its primary offering, providing comprehensive HR outsourcing services[14]. - The company offers a cloud-based human capital management platform, Insperity Premier, which provides role-based access to HR functions for clients and WSEEs[28]. - The company offers a comprehensive human capital management and payroll services solution for clients not choosing PEO HR Outsourcing Solutions, integrating various HR functionalities[37]. - The company offers a lower-priced PEO service called Workforce Synchronization to meet middle market client needs[137]. Financial Performance - In 2024, the company paid dividends totaling $89 million, reflecting its financial condition and operating results[182]. - Net income decreased by 47% to $91 million, and diluted earnings per share (EPS) fell by 46% to $2.42[194]. - Adjusted EBITDA decreased by 24% to $270 million, with adjusted net income and adjusted EPS down by 36% and 35% to $135 million and $3.58, respectively[194]. - The company ended 2024 with working capital of $155 million[202]. - The company recorded a client attrition rate of approximately 19% in 2024, indicating potential challenges in client retention[125]. Market and Client Dynamics - The client retention rate for PEO HR Outsourcing Solutions was approximately 81% in 2024, down from 83% in 2023, with a five-year average retention rate of 84%[55]. - Clients exceeding 1,000 paid WSEEs represented 3% of total average paid WSEEs in 2024, compared to 5% in 2023[35]. - The average number of Worksite Employees (WSEEs) in the middle market sector decreased by 3% from 2023 to 2024, maintaining approximately 26% of the total average paid WSEEs[35]. - The middle market sector, defined as companies with 150 to 5,000 WSEEs, represented 26% of the average paid WSEEs in 2024[125]. Regulatory and Compliance - The company has received its designation as a Certified Professional Employer Organization (CPEO) from the IRS, clarifying its role in payroll tax reporting[21]. - The company’s services include compliance assistance with complex employment-related laws and regulations, enhancing the value proposition of its offerings[22]. - Insperity is subject to various federal, state, and local laws affecting its PEO HR Outsourcing Solutions operations[75]. - Compliance with the California Privacy Rights Act has required the company to reallocate resources and incur additional costs[144]. Risk Factors - The company faces risks from adverse economic conditions that could negatively impact demand for its outsourced HR services, particularly during periods of weak economic conditions or tight labor markets[94]. - Labor shortages and increasing competition for skilled workers have resulted in higher turnover and could adversely affect the company's growth plans and client service delivery[100]. - Inflationary pressures have increased operating costs, which may not be fully offset by price increases for services, potentially impacting profit margins[102]. - The company is dependent on its PEO clients to properly report the locations of WSEEs, and any miscalculations could lead to fines or penalties[110]. - The company faces potential disruptions in its business due to health care reform, which may affect its ability to provide health care benefits to WSEEs[114]. Insurance and Benefits - The health insurance contract with United provides approximately 86% of participants' health insurance coverage, expiring on December 31, 2026[67]. - Workers' compensation coverage through Chubb is fully insured and expires on September 30, 2025[67]. - The company has a financial responsibility with United limited to the first $1 million of paid claims per claimant per year[210]. - Estimated total benefits costs for 2024 are projected to be $3.0 billion[212]. Cybersecurity and Technology - The Board's Finance, Risk Management and Audit Committee oversees major risk exposures, including cybersecurity risks, to ensure effective governance[157]. - The company has established a formal incident response team and conducts regular cybersecurity training and exercises to enhance its security measures[162]. - The company faces risks from cybersecurity incidents, which could lead to significant financial losses and reputational damage[141]. - The company may incur substantial costs to comply with evolving regulations related to data privacy and cybersecurity[145]. Strategic Initiatives - The company is developing a joint solution with Workday, which involves significant resource allocation and integration challenges[149]. - The success of the strategic partnership with Workday depends on effective integration and cooperation, with potential risks of not achieving anticipated benefits[150]. - The company has adopted a strategy to market and sell additional solutions within and outside of its PEO HR Outsourcing Solutions, which may involve partnerships, investments, or acquisitions[152].

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $0.05 per share and adjusted EBITDA of $23 million for Q4 2024, exceeding the midpoint of the expected range [5] - The average number of paid worksite employees was 393,093, a decrease of 2% from Q4 2023, reflecting weak client hiring [6] - Total gross profit declined by 2% from Q4 2023 due to the decrease in paid worksite employees, despite gross profit per worksite employee remaining stable at $235 per month [7][10] - Operating expenses increased by 17% over Q4 2023, primarily due to investments in the Workday strategic partnership [9] Business Line Data and Key Metrics Changes - Gross profit per worksite employee per month was $285 in 2024, a 3% increase over 2023, despite a 1.6% drop in paid worksite employees [10] - Client retention averaged 99% for the quarter, with a 37% increase in worksite employees paid from new clients compared to Q4 2023 [6][12] Market Data and Key Metrics Changes - The company experienced nearly flat net growth in its client base for 2024, the lowest level of hiring in the last twenty years, with a significant impact from macroeconomic conditions [19][22] - The National Federation of Independent Business reported the highest Small Business Optimism Index in six years, indicating potential for increased staffing levels in 2025 [22] Company Strategy and Development Direction - The company aims to regain growth momentum through successful sales and client retention campaigns, with a focus on the Workday strategic partnership expected to enhance long-term growth and profitability [14][30] - Key initiatives for 2025 include product specialization, optimizing sales organization, and improving service efficiency across HR solutions [25][27] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in small and midsize business decision-makers' mindsets post-election, leading to increased optimism and potential hiring [21][24] - The company conservatively forecasts a 2% to 4% growth in worksite employees for 2025, with expectations of sequential quarterly growth beyond Q1 [48][54] Other Important Information - The company plans to invest approximately $62 million in the Workday strategic partnership in 2025, up from $57 million in 2024 [52] - Adjusted EBITDA for 2025 is forecasted to be between $240 million and $285 million, with adjusted EPS expected to range from $3.10 to $3.95 [54] Q&A Session Summary Question: Can you talk about the sales leads from the Workday partnership? - Management indicated significant progress in the go-to-market strategy and expects lead flow to improve as the year unfolds, with specific clients already interested in beta testing the new solution [60][65] Question: How will the $62 million in expenses be layered throughout the year? - Operating costs related to Workday are expected to be relatively steady throughout the year, with a small drop-off after completing the corporate component [67] Question: How do you expect the increase in health cost trends to impact new sales and retention? - Management believes strong pricing strategies will mitigate the impact of increased health costs, maintaining a competitive position in the market [72][73] Question: Can you elaborate on the sales optimization strategy? - The sales optimization plan focuses on aligning sales teams with specific HR solutions, improving accountability and efficiency, and is expected to yield significant benefits [79][82] Question: What is the outlook for mid-market retention and the impact of the Workday partnership? - Management reported a dramatic improvement in mid-market retention, attributing it to the Workday partnership and increased client engagement [85][86] Question: What are the expectations for net hiring in 2025? - The company anticipates a gradual improvement in net hiring, weighted towards the latter half of the year, as business owners' mindsets shift positively [88][90]

Insperity, Inc. (NSP) came out with quarterly earnings of $0.05 per share, beating the Zacks Consensus Estimate of $0.02 per share. This compares to earnings of $0.75 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 150%. A quarter ago, it was expected that this company would post earnings of $0.32 per share when it actually produced earnings of $0.39, delivering a surprise of 21.88%.Over the last four quarters, the company has ...

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $0.05 per share and adjusted EBITDA of $23 million for Q4 2024, exceeding the midpoint of expectations [5] - The average number of paid worksite employees was 309,093, a decrease of 2% from Q4 2023, reflecting weak client hiring [5][6] - Total gross profit declined by 2% from Q4 2023 due to the decrease in paid worksite employees, while gross profit per worksite employee was $235 per month, slightly above expectations [5][6] - For the full year 2024, adjusted EBITDA was $270 million and adjusted EPS was $3.58, both above initial guidance [9] Business Line Data and Key Metrics Changes - The company experienced a 37% increase in worksite employees paid from new clients compared to Q4 2023, indicating strong performance in client acquisition [5] - Client retention averaged 99% for the quarter, demonstrating effective retention strategies [5] - Operating expenses increased by 17% over Q4 2023, primarily due to investments in the Workday strategic partnership [6][9] Market Data and Key Metrics Changes - The small to mid-sized business client base experienced nearly flat net growth in worksite employees for 2024, the lowest level in two decades excluding recession years [14] - The National Federation of Independent Business January Small Business Optimism Index reached its highest level in six years, indicating improved sentiment among small business owners [16] Company Strategy and Development Direction - The company aims to regain growth momentum through a successful fall sales and client retention campaign, with a focus on key initiatives for 2025 [11][17] - The strategic partnership with Workday is expected to enhance long-term growth and profitability, with significant milestones anticipated in 2025 [21][29] - The company is implementing a role-based approach to optimize its sales organization and improve service efficiency across its HR solutions [18][19] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in small and mid-sized business decision-makers' mindsets post-election, leading to increased optimism and hiring expectations for 2025 [15][16] - The company conservatively forecasts net client hiring to improve in 2025 but remains below historical levels, with expected worksite employee growth of 2% to 4% over 2024 [31][32] - Management emphasized the importance of aligning sales, service, and pricing teams to drive results in 2025 [30] Other Important Information - The company plans to spend approximately $62 million on the Workday strategic partnership in 2025, up from $57 million in 2024 [34] - The expected benefits cost trend for 2025 is forecasted to be between 5% to 6.5%, compared to 4.3% in 2024 [32][33] Q&A Session Summary Question: Can you talk about the sales leads from the Workday partnership and their impact on client retention? - Management indicated significant progress in the go-to-market strategy and expects improved lead flow and client retention as the joint solution is developed [40][42] Question: How will the operating expenses related to Workday be structured throughout the year? - Operating expenses are expected to be relatively steady throughout the year, with a small drop-off after completing the corporate component [43] Question: What is the outlook for net hiring in 2025? - Management anticipates a gradual improvement in net hiring, weighted towards the second half of the year, with expectations of a return to mid-single-digit growth rates [60][61] Question: How is the competitive pricing environment affecting new sales and retention? - Management noted that while the competitive environment is significant, they have maintained strong pricing and developed unique incentives to attract clients without compromising long-term pricing strategies [66][68] Question: Can you elaborate on the sales optimization strategy and its expected benefits? - The sales optimization strategy focuses on streamlining sales efforts across different HR solutions, which is expected to enhance accountability and improve sales efficiency [54][55]

Revenue and Profitability - Q4 2024 revenues increased 2% to $1.6 billion, driven by a 4% increase in revenue per WSEE[2] - Full year 2024 revenues increased by 1% to $6.6 billion, with a 3% increase in revenue per WSEE[5] - Revenues for Q4 2024 increased by 2% to $1,613 million compared to $1,580 million in Q4 2023, while annual revenues rose by 1% to $6,581 million from $6,486 million[21] - Gross profit for Q4 2024 decreased 2% to $218 million, with gross profit per employee consistent with the prior year[3] - Operating income for Q4 2024 was a loss of $15 million, a decline of 165% from an income of $23 million in Q4 2023, with annual operating income down 47% to $117 million from $219 million[21] - Net income for Q4 2024 was a loss of $9 million, a 147% decrease from a net income of $19 million in Q4 2023, with annual net income falling 47% to $91 million from $171 million[21] - Adjusted net income for 2024 was $135 million, down 36% from $212 million in 2023[25] Expenses and Costs - Operating expenses increased 17% over Q4 2023, including approximately $19 million related to the Workday strategic partnership[4] - Operating expenses for Q4 2024 increased by 17% to $233 million compared to $199 million in Q4 2023, with annual operating expenses rising 14% to $935 million from $818 million[21] - Stock-based compensation for Q4 2024 rose by 27% to $14 million from $11 million in Q4 2023, and increased by 15% for the year to $61 million from $53 million[21] - Non-bonus payroll costs for Q4 2024 were $8,314 million, reflecting a 2% increase from $8,966 million in Q4 2023, with annual non-bonus payroll costs rising 1% to $32,070 million from $31,677 million[24] Shareholder Returns - The company returned $152 million to shareholders in 2024 through share repurchases and cash dividends[7] Guidance and Projections - 2025 guidance includes an expected average of 319,500 WSEEs paid, representing a 4% year-over-year increase[10] - Adjusted EPS for full year 2025 is projected to be $3.95, reflecting a 10% year-over-year increase[10] - The company expects Q1 2025 net income guidance of $61 - $70 million and full year 2025 guidance of $71 - $102 million[27] - Adjusted EBITDA guidance for Q1 2025 is $121 - $135 million, with full year 2025 guidance of $240 - $285 million[27] - The company anticipates diluted EPS for Q1 2025 to be in the range of $1.61 - $1.87[27] Cash and Liquidity - Cash and cash equivalents increased to $1.039 billion as of December 31, 2024, up from $693 million in 2023[20] - Cash, cash equivalents, and marketable securities increased from $709 million in 2023 to $1,055 million in 2024[25] Employee Metrics - Average number of worksite employees (WSEEs) paid per month decreased 2% from Q4 2023 to 309,093 WSEEs[2] - Average WSEEs paid decreased by 2% to 309,093 in Q4 2024 from 315,072 in Q4 2023, and also fell by 2% for the year to 307,261 from 312,102[22] Adjusted Metrics - Adjusted EBITDA for the year 2024 was $270 million, a decrease of 24% compared to $354 million in 2023[25] - Total non-GAAP adjustments for adjusted EPS in 2024 amounted to $1.16, down from $1.05 in 2023[26] - Adjusted EBITDA and adjusted net income measures were provided to enhance transparency regarding the company's operational performance, excluding non-cash stock-based compensation[23] Earnings Per Share - Basic net income per share for Q4 2024 was $(0.22), a 142% decline from $0.52 in Q4 2023, while annual basic EPS decreased by 46% to $2.44 from $4.53[21] - Diluted EPS decreased by 142% from $0.52 in 2023 to $(0.22) in 2024[26]

Insperity, Inc. (NSP) is currently benefiting from the expanding PEO market, strong SMB demand, robust portfolio, consistent shareholder returns and solid cash position.Factors That Augur Well for NSP StockPer Straits’ Research, the global professional employer organization (PEO) market was valued at $66.23 billion in 2024 and is expected to grow from an estimated $73.58 billion in 2025 to $152.14 billion by 2033, registering a compound annual growth rate (CAGR) of 11.1%. This fast-growing industryis curren ...

Insperity, Inc. (NSP) reported mixed third-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, while revenues missed the same.See Zacks Earnings Calendar to stay ahead of market-making news.The earnings beat impressed the market as the stock gained 5.3% since the release of results on Oct. 31, 2024.Adjusted earnings (excluding 32 cents from non-recurring items) of 39 cents per share outpaced the consensus estimate by 21.9% but decreased 73.3% year over year. Revenues of $1.6 billi ...

Insperity (NSP) witnesses significant top-line growth due to its diversified revenue base and benefits from the growing Professional Employer Organization (PEO) industry. However, rising expenses are expected to keep the bottom line under pressure. The company's revenues for 2024 and 2025 are expected to increase 2.1% and 7.5%, respectively, year over year. The company has an expected long-term (three to five years) earnings per share growth rate of 15%. Factors That Auger Well Insperity's diversified reven ...

Insperity, Inc. (NSP) reported mixed second-quarter 2024 results, wherein earnings surpassed the Zacks Consensus Estimate, while revenues missed the same. NSP shares have declined 4.1% since its earnings release on Aug 1 despite an earnings beat. Adjusted earnings (excluding 38 cents from non-recurring items) of 86 cents per share outpaced the consensus estimate by 17.8% and increased 34.4% year over year. Revenues of $1.6 billion missed the Zacks Consensus Estimate by a slight margin but increased 1.3% fro ...

Financial Performance - Revenues for Q2 2024 were $1,605 million, a 1.3% increase from $1,585 million in Q2 2023[9] - Gross profit for Q2 2024 was $260 million, up 15.6% from $225 million in Q2 2023[9] - Net income for the six months ended June 30, 2024, was $97 million, compared to $107 million for the same period in 2023, reflecting a decrease of 9.3%[10] - Operating income for Q2 2024 was $23 million, an increase from $16 million in Q2 2023, representing a 43.8% growth[9] - The company reported a basic net income per share of $0.48 for Q2 2024, compared to $0.34 for Q2 2023, marking a 41.2% increase[9] - Net income for the three months ended June 30, 2024, was $18 million, compared to $12 million for the same period in 2023, representing a 50% increase[51] - Adjusted net income decreased by 7% to $119 million in the first six months of 2024, compared to $128 million in the same period of 2023[95] Cash Flow and Liquidity - Cash flows from operating activities for the six months ended June 30, 2024, were $51 million, a significant improvement from a cash outflow of $70 million in the same period of 2023[10] - Cash and cash equivalents at the end of Q2 2024 were $676 million, down from $693 million at the end of 2023[6] - As of June 30, 2024, the total cash, cash equivalents, and marketable securities amounted to $694 million, a decrease from $746 million on December 31, 2023[34] - The company reported cash and cash equivalents of $676 million as of June 30, 2024, compared to $580 million for the same period in 2023, reflecting a year-over-year increase of 16.5%[38] - The outstanding balance on the revolving credit facility was $369 million as of June 30, 2024, with an available borrowing capacity of $280 million[44] - The revolving credit facility has a current borrowing capacity of $650 million, which is available for working capital and general corporate purposes[89] Revenue and Billing - Total revenue for the second quarter of 2024 was $1,605 million, a 1% increase from $1,585 million in the same period of 2023[32] - Revenue for the first six months of 2024 reached $3,407 million, up 2% from $3,355 million in the first half of 2023[32] - Gross billings for the second quarter of 2024 were $10,361 million, compared to $10,245 million in the second quarter of 2023[33] - Revenues per WSEE per month increased by 3%, or $46, in Q2 2024[59] - Revenues per WSEE per month increased by $50 due to a 3% rise in average pricing[69] Expenses and Costs - Operating expenses for Q2 2024 increased 13% to $237 million compared to $209 million in Q2 2023[74] - Salaries for corporate and sales staff increased 15% to $126 million in Q2 2024, primarily due to a 6% increase in headcount[75] - General and administrative expenses for Q2 2024 rose 30% to $57 million, driven by increased software licensing and professional services fees[76] - The cost of group health insurance and related employee benefits decreased by $18 per WSEE per month in Q2 2024 compared to Q2 2023[66] - Workers' compensation costs decreased by 5%, or $1 per WSEE per month, in YTD 2024 compared to YTD 2023[70] Shareholder Returns - The company paid dividends totaling $44 million in the first half of 2024, compared to $42 million in the same period of 2023[10] - Total dividends declared and paid during the six months ended June 30, 2024, amounted to $44 million, up from $42 million in the same period of 2023[50] - The company repurchased 203,744 shares of common stock under its Repurchase Program during the six months ended June 30, 2024[48] Assets and Liabilities - Total current assets as of June 30, 2024, were $1,621 million, slightly up from $1,595 million at the end of 2023[7] - Total liabilities decreased to $1,007 million as of June 30, 2024, from $1,013 million at the end of 2023[7] - As of June 30, 2024, unbilled accounts receivable amounted to $727 million, up from $669 million at December 31, 2023[31] - Payroll taxes and other payroll deductions payable were $504 million as of June 30, 2024, down from $566 million at the end of 2023[40] Health Insurance and Claims - The estimated incurred but not reported claims for health insurance were based on claims processed, completion rates, and participant demographics[21] - The company recorded a decrease of $26 million in benefits costs for the first six months of 2024 due to changes in estimated run-off related to prior periods[22] - Workers' compensation costs were reduced by $17 million for the first six months of 2024 due to changes in estimated losses related to prior periods[25] - The accumulated cash surplus required to be maintained in the health insurance plan is $9 million, with a surplus of $18 million as of June 30, 2024[22] - Premiums owed to United at June 30, 2024, were $35 million, included in accrued health insurance costs[94] Tax and Regulatory - Effective income tax rate for the first six months of 2024 was 29%, up from 24% in the same period of 2023[80] - The company had $97 million in funds received from the IRS related to employee retention tax credits, which were distributed to clients in early July 2024[37] Adjusted Metrics - Adjusted EBITDA increased by 29% to $66 million in Q2 2024[58] - Adjusted EBITDA for the six months ended June 30, 2024, was $208 million, compared to $114 million for the same period in 2023, marking an 83% increase[86] - Total non-GAAP adjustments for net income in the three months ended June 30, 2024, amounted to $15 million, leading to an adjusted net income of $33 million, a 32% increase year-over-year[87]