Company Overview - Insperity, Inc. (NSP) shares have increased by approximately 4.8% over the past month, outperforming the S&P 500 [1] - Recent earnings report indicates important drivers for the stock's performance [1] Earnings Estimates - Fresh estimates for Insperity have trended upward in the past month [2] - The overall direction and magnitude of estimate revisions appear promising [4] VGM Scores - Insperity has a strong Growth Score of A, but a low Momentum Score of F [3] - The stock received an A grade on the value side, placing it in the top 20% for this investment strategy [3] - The aggregate VGM Score for Insperity is A, which is significant for investors not focused on a single strategy [3] Industry Performance - Insperity is part of the Zacks Staffing Firms industry, where ManpowerGroup (MAN) has gained 6.2% over the past month [5] - Manpower reported revenues of $4.4 billion for the last quarter, reflecting a year-over-year decline of 5% [5] - Manpower's EPS for the same period was $1.02, down from $1.45 a year ago [5] Future Outlook - For the current quarter, Manpower is expected to post earnings of $0.59 per share, indicating a year-over-year change of -37.2% [6] - The Zacks Consensus Estimate for Manpower has changed by -1.1% over the last 30 days [6] - Manpower holds a Zacks Rank 5 (Strong Sell), and its VGM Score is C [6]

Core Insights - Insperity, Inc. reported strong fourth-quarter 2024 results, with earnings and revenues exceeding the Zacks Consensus Estimate [1][2] Financial Performance - Adjusted earnings were 5 cents per share, surpassing the consensus estimate by over 100%, but down 93.3% year over year [2] - Revenues reached $1.6 billion, beating the Zacks Consensus Estimate by 1% and increasing 2.1% from the previous year [2] - Gross profit declined 2% year over year to $218 million, with a gross margin of 13.5%, down 60 basis points from Q4 2023 [4] - Operating expenses rose 17% year over year to $233 million, with operating expenses per worksite employee per month increasing 19% to $251 [4] - The company reported an operating loss of $15 million compared to an operating income of $23 million in the same quarter last year [5] - Adjusted EBITDA for the quarter was $23 million, a decrease of 41% year over year [5] Employee Metrics - The average number of worksite employees paid per month decreased by 2% year over year to 309,093 [3] - Revenue per worksite employee per month increased by 4% from the previous year to $1,739 [3] Balance Sheet & Cash Flow - Insperity ended Q4 2024 with cash and cash equivalents of $1 billion, up from $470 million in the previous quarter [6] - Long-term debt remained flat at $369 million [6] - The company distributed $22 million in cash dividends during the quarter, with capital expenditures totaling $13 million [6] Guidance - For Q1 2025, Insperity's earnings guidance is set at $1.89-$2.15 per share, with the midpoint slightly above the Zacks Consensus Estimate of $2.01 [7] - For the full year 2025, the company expects adjusted EPS to be in the range of $3.10-$3.95, with the midpoint lower than the Zacks Consensus Estimate of $3.57 [8] - Adjusted EBITDA guidance for 2025 is projected at $240-$285 million [8]

Core Viewpoint - Insperity, Inc. reported strong fourth-quarter 2024 results with earnings and revenues exceeding expectations, yet the stock declined significantly post-release due to market reactions [1][2]. Financial Performance - Adjusted earnings were 5 cents per share, surpassing the consensus estimate by over 100%, but down 93.3% year over year [2]. - Revenues reached $1.6 billion, beating the Zacks Consensus Estimate by 1% and increasing 2.1% from the previous year [2]. - Gross profit decreased by 2% year over year to $218 million, with a gross margin of 13.5%, down 60 basis points from Q4 2023 [4]. - Operating expenses rose 17% year over year to $233 million, with operating expenses per worksite employee per month increasing 19% to $251 [4]. Operational Metrics - The average number of worksite employees paid per month fell by 2% year over year to 309,093, while revenue per worksite employee per month increased by 4% to $1,739 [3]. - The company reported an operating loss of $15 million compared to an operating income of $23 million in the same quarter last year [5]. Cash Flow and Balance Sheet - Insperity ended Q4 2024 with cash and cash equivalents of $1 billion, up from $470 million in the previous quarter, while long-term debt remained stable at $369 million [6]. - The company distributed $22 million in cash dividends during the quarter, with capital expenditures totaling $13 million [6]. Guidance - For Q1 2025, Insperity's earnings guidance is set at $1.89-$2.15 per share, with the midpoint of $2.02 exceeding the Zacks Consensus Estimate of $1.98 [7]. - For the full year 2025, the company expects adjusted EPS to be in the range of $3.10-$3.95, with the midpoint of $3.53 lower than the consensus estimate of $3.80 [8].

Supplement to Earnings Release Safe Harbor Statement The statements contained herein that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify such forward-looking statements by the words "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," "forecasts," "likely," "possibly," "probably," "could," "goal," "opportunity," "objective," "target," ...

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 ...