Financial Data and Key Metrics Changes - The company reported Q1 2025 adjusted EPS of $1.57 and adjusted EBITDA of $102 million, which fell below guidance due to higher than expected benefits costs [5][6] - The average number of paid worksite employees increased by 0.7% year-over-year to 306,023, but growth was slightly below guidance due to delays and cancellations in new client starts [5][6] - Gross profit per worksite employee decreased to $338 per month from $378 in Q1 2024, attributed to an 8.4% increase in benefits costs per covered employee [6][9] Business Line Data and Key Metrics Changes - Client retention improved to 91% in Q1 2025 from 88% in Q1 2024, indicating strong client loyalty despite market challenges [20] - Client net hiring was slightly positive but significantly weaker compared to historical norms [6][20] - The company experienced a 3% increase in worksite employees paid from new client sales compared to Q1 2024, despite overall hiring challenges [5][6] Market Data and Key Metrics Changes - A client survey indicated that 66% of respondents expect the economic climate to negatively affect their business, up from 29% in January [16] - The percentage of clients expecting to add employees in the coming quarter decreased to 34% from 43% [16] - The Northeast region showed better results compared to other areas, but overall trends were consistent across the nation [70] Company Strategy and Development Direction - The company is focusing on mitigating benefits cost challenges through pricing adjustments and plan design changes, with a forecasted benefits cost per covered employee range of 6.5% to 7.5% for the full year [10][35] - The strategic partnership with Workday is a key focus, with a go-to-market plan established to target mid-market businesses, which is expected to significantly drive growth starting in 2026 [30][31] - The company aims to leverage the Workday partnership to enhance service offerings and client engagement, particularly for businesses with 150 to 5,000 employees [88] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the unexpected rise in benefits costs but remains optimistic about future profitability improvements in 2026 [10][64] - The company anticipates a modest improvement in worksite employee growth throughout the year, barring significant changes in the macroeconomic environment [36] - Management noted that the current period of uncertainty is less likely to be a temporary spike, suggesting a more cautious approach to forecasting [86] Other Important Information - Operating expenses were managed slightly below budget, with a 2% increase year-over-year, primarily due to investments in the Workday partnership [11][12] - The company returned $23 million in cash dividends and repurchased 224,000 shares at a cost of $19 million in Q1 [12] - The effective tax rate for the quarter was 29%, consistent with the previous year [12] Q&A Session Summary Question: Can you elaborate on the onboarding pauses mentioned in Q1? - Management noted a dramatic reversal in small business optimism due to government actions, leading to delays and cancellations in onboarding new clients [40][41] Question: What is the expected cadence of spending for the Workday partnership? - The company anticipates stable spending throughout the year, with costs expected to decrease in subsequent years as the project matures [45][48] Question: What actions from Washington could improve customer sentiment? - Management believes that stabilizing the tax system and regulatory environment could significantly boost confidence among clients [53][54] Question: How quickly can pricing adjustments be made in response to healthcare costs? - Pricing changes are already being implemented, with expectations for improved margins as the year progresses [63][64] Question: Are there regional or industry differences in healthcare costs and hiring hesitancy? - The company has observed better results in the Northeast, but overall trends are consistent across the nation [70] Question: What is the expected profitability from the Workday partnership? - Management anticipates higher upfront pricing and ongoing revenue contributions from the new joint solution, though specific figures are still being analyzed [78][79]

Financial Performance - Q1 2025 average paid worksite employees increased by 1%[8] - Worksite employees paid from new client sales increased 3% compared to Q1 2024[8] - Total client attrition for Q1 2025 improved to 9% compared to 12% in Q1 2024[8] - Q1 2025 Adjusted EBITDA declined 28% year-over-year[11] - Q1 2025 Adjusted EPS declined 31% year-over-year[11] Balance Sheet and Cash Flow - Adjusted Cash was $124 million as of March 31, 2025[13] - Total Debt remained at $369 million as of March 31, 2025[13] - Adjusted EBITDA was $102 million for the year-to-date period ended March 31, 2025[13] Outlook - Q2 2025 average WSEEs paid are expected to be between 308,000 and 311,000, representing a year-over-year increase between 03% and 13%[15] - FY 2025 average WSEEs paid are expected to be between 308,800 and 316,400, representing a year-over-year increase between 05% and 30%[15] - FY 2025 Adjusted EBITDA is projected to be between $190 million and $245 million, a year-over-year decrease between 30% and 9%[15] - FY 2025 Adjusted EPS is projected to be between $223 and $328, a year-over-year decrease between 38% and 8%[15]

分组1 - Insperity, Inc. reported quarterly earnings of $1.57 per share, missing the Zacks Consensus Estimate of $2.01 per share, and down from $2.27 per share a year ago, representing an earnings surprise of -21.89% [1] - The company posted revenues of $1.86 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.43%, compared to year-ago revenues of $1.8 billion [2] - Insperity has surpassed consensus EPS estimates three times over the last four quarters, but has topped consensus revenue estimates only once in the same period [2] 分组2 - The stock's immediate price movement will depend on management's commentary during the earnings call, with Insperity shares having added about 1.4% since the beginning of the year, contrasting with the S&P 500's decline of -6% [3] - The current consensus EPS estimate for the coming quarter is $0.71 on $1.68 billion in revenues, and for the current fiscal year, it is $3.46 on $6.91 billion in revenues [7] - The Staffing Firms industry, to which Insperity belongs, is currently in the bottom 7% of the Zacks Industry Rank, indicating potential underperformance compared to higher-ranked industries [8]

Financial Data and Key Metrics Changes - The company reported first quarter adjusted EPS of $1.57 and adjusted EBITDA of $102 million, which fell below guidance due to higher than expected benefits costs [5][6] - The average number of paid worksite employees increased by 0.7% year-over-year to 306,023, but growth was slightly below guidance due to delays and cancellations in new client starts [5][6] - Gross profit per worksite employee decreased to $338 per month from $378 in the prior year, attributed to an 8.4% increase in benefits costs per covered employee [6][10] Business Line Data and Key Metrics Changes - Client retention improved to 91% in Q1, a significant increase from 88% in the previous year, indicating strong client loyalty [18] - Client net hiring was slightly positive but remained weak compared to historical norms [6][33] Market Data and Key Metrics Changes - A client survey indicated that 66% of respondents expect the economic climate to negatively affect their business, up from 29% in January [15] - The percentage of clients expecting to add employees decreased to 34% from 43% [15] Company Strategy and Development Direction - The company is focusing on mitigating the impact of rising benefits costs through pricing adjustments and plan design changes, with a forecasted benefits cost per covered employee of 6.5% to 7.5% for the full year [9][34] - The strategic partnership with Workday is seen as a significant growth driver, with plans to launch a joint solution targeting mid-market businesses [25][29] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the unexpected rise in benefits costs but remains optimistic about future profitability improvements as pricing adjustments are implemented [10][36] - The company has reduced its worksite employee growth forecast for the year to 0.5% to 3% due to macroeconomic uncertainties [33][34] Other Important Information - Operating expenses increased slightly by 2% year-over-year, primarily due to investments in the Workday partnership [10][11] - The company returned $23 million in cash dividends and repurchased 224,000 shares at a cost of $19 million during the quarter [11] Q&A Session Summary Question: Can you elaborate on the onboarding pauses mentioned? - Management noted that optimism in the small business community reversed dramatically due to government actions, leading to delays and cancellations in onboarding new clients [40][41] Question: What is the expected cadence of spending for the Workday partnership? - The company anticipates stable spending throughout the year, with a gradual decrease in costs expected in years three to five of the partnership [45][48] Question: What actions from Washington could improve customer confidence? - Management believes that minor changes in tax policy or regulatory environments could significantly boost confidence among clients [54] Question: How quickly can pricing adjustments be made in response to healthcare costs? - Pricing changes are already being implemented, with expectations for improvements in gross margins as the year progresses [63][64] Question: Are there regional differences in healthcare costs or hiring hesitancy? - The company has seen better results in the Northeast, but overall trends appear to be consistent across the nation [70]

[Executive Summary & Q1 2025 Results](index=1&type=section&id=Executive%20Summary%20%26%20Q1%202025%20Results) Insperity's Q1 2025 results show revenue growth offset by declining gross profit and net income due to higher healthcare costs, with management initiating pricing adjustments and progressing on strategic partnerships [First Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) Insperity reported a 1% increase in average worksite employees (WSEEs) and a 3% rise in revenues for Q1 2025, reaching $1.9 billion, but gross profit decreased by 10% to $310 million due to higher healthcare costs, leading to significant declines in net income and diluted EPS Q1 2025 Key Financial Highlights | Metric | Q1 2025 | Q1 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | Average WSEEs paid | 306,023 | 303,904 | 1% | | Revenues | $1.9 billion | $1.8 billion | 3% | | Gross profit | $310 million | $345 million | (10)% | | Operating expenses | $242 million | $237 million | 2% | | Net income | $51 million | $79 million | (35)% | | Diluted EPS | $1.35 | $2.08 | (35)% | | Adjusted EBITDA | $102 million | $142 million | (28)% | | Adjusted EPS | $1.57 | $2.27 | (31)% | - Gross profit decrease was primarily due to higher-than-expected benefits costs, specifically an acceleration in inpatient, outpatient, and pharmacy costs, and increased frequency of large claim activity, with healthcare costs including approximately **$12 million** of higher-than-expected runoff from claims related to prior periods[4](index=4&type=chunk) - Operating expenses included **$13 million** for the Workday strategic partnership in Q1 2025, up from **$5 million** in Q1 2024[5](index=5&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management acknowledged the impact of macro-economic turbulence and healthcare cost volatility on Q1 financial results but emphasized solid execution on building a foundation for future growth, noting progress on the Workday strategic partnership and the initiation of a pricing plan to address rising healthcare costs - CEO Paul J. Sarvadi noted that Q1 financial results, reflecting macro-economic turbulence and healthcare cost volatility, contrasted with solid execution of the game plan for future growth acceleration[4](index=4&type=chunk) - Excellent progress was made on the Workday strategic partnership milestones, including an agreed-upon go-to-market plan anticipated to add a new growth driver in **2026** and beyond[4](index=4&type=chunk) - CFO James D. Allison stated that the company has made good progress with its operating plan, focusing on operating expense management and accelerating growth[6](index=6&type=chunk) - A pricing plan has been initiated to address the projected higher healthcare cost trend, and other options are under evaluation to contain or reduce costs and improve profitability in **2026**[6](index=6&type=chunk) [Shareholder Returns and Liquidity](index=1&type=section&id=Shareholder%20Returns%20and%20Liquidity) During the first three months of 2025, Insperity returned $42 million to shareholders through share repurchases and cash dividends, while maintaining a healthy liquidity position with $124 million in adjusted cash and $280 million available under its credit facility Q1 2025 Shareholder Returns & Liquidity | Metric | Amount | | :-------------------------------- | :----- | | Shares repurchased | 224,000 | | Cost of share repurchases | $19 million | | Dividends paid | $23 million | | Total return to shareholders | $42 million | | Adjusted cash (as of March 31, 2025) | $124 million | | Available under credit facility | $280 million | | Total credit facility | $650 million | [2025 Financial Guidance](index=2&type=section&id=2025%20Financial%20Guidance) The company's 2025 financial guidance projects modest WSEE growth but anticipates significant declines in Adjusted EPS and Adjusted EBITDA for Q2 and the full year, alongside definitions of key non-GAAP metrics [Q2 and Full Year 2025 Outlook](index=2&type=section&id=Q2%20and%20Full%20Year%202025%20Outlook) Insperity provided updated guidance for Q2 and the full year 2025, projecting modest WSEE growth but a significant year-over-year decrease in Adjusted EPS and Adjusted EBITDA for both periods, reflecting the challenges faced in Q1 2025 Financial Guidance | Metric | Q2 2025 Guidance | YoY Change (Q2) | Full Year 2025 Guidance | YoY Change (FY) | | :---------------------- | :--------------- | :-------------- | :---------------------- | :-------------- | | Average WSEEs paid | 308,000 - 311,000 | 0.3% - 1.3% | 308,800 - 316,400 | 0.5% - 3.0% | | Adjusted EPS | $0.29 - $0.67 | (66)% - (22)% | $2.23 - $3.28 | (38)% - (8)% | | Adjusted EBITDA (in millions) | $33 - $53 | (50)% - (20)% | $190 - $245 | (30)% - (9)% | [Definition of Key Metrics](index=2&type=section&id=Definition%20of%20Key%20Metrics) This section defines the key non-GAAP financial metrics used in the company's reporting and guidance, including Average WSEEs paid, Adjusted EPS, and Adjusted EBITDA, to provide clarity on how these figures are calculated - Average WSEEs paid is determined by calculating the company's cumulative WSEEs paid during the period divided by the number of months in the period[10](index=10&type=chunk) - Adjusted EPS represents diluted net income per share computed in accordance with GAAP, excluding the impact of non-cash stock-based compensation[10](index=10&type=chunk) - Adjusted EBITDA represents net income computed in accordance with GAAP, plus interest expense, income taxes, depreciation and amortization expense, amortization of SaaS implementation costs, and non-cash stock-based compensation[11](index=11&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) This section provides an overview of Insperity's mission and comprehensive HR solutions, including its 2024 revenues, and details regarding the Q1 2025 earnings conference call and webcast [About Insperity](index=2&type=section&id=About%20Insperity) Insperity, founded in 1986, is a leading provider of human resources and business performance solutions, offering a comprehensive suite of scalable HR solutions to help businesses succeed through premium HR service and technology, reporting $6.6 billion in revenues in 2024 - Insperity's mission since **1986** has been to help businesses succeed so communities prosper, offering a comprehensive suite of scalable HR solutions[13](index=13&type=chunk) - The company delivers administrative relief, reduced liabilities, and better benefit solutions through an optimal blend of premium HR service and technology[13](index=13&type=chunk) Insperity 2024 Revenues | Metric | Amount | | :------- | :----------- | | Revenues | $6.6 billion | [Conference Call and Webcast](index=2&type=section&id=Conference%20Call%20and%20Webcast) Insperity hosted a conference call and webcast on April 29, 2025, to discuss the first quarter results and updated 2025 guidance, with replay and archived webcast available - A conference call was hosted on **April 29, 2025**, at **8:30 a.m. ET** to discuss results and guidance, with a webcast available at http://ir.insperity.com[12](index=12&type=chunk) - A replay of the conference call is available at **877-481-4010**, conference i.d. number **52321**, and the webcast will be archived for one year[12](index=12&type=chunk) [Forward-Looking Statements & Risk Factors](index=3&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section outlines the disclaimer for forward-looking statements, emphasizing inherent risks and uncertainties, and details various factors that could materially impact Insperity's financial performance and operations [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section provides a disclaimer regarding forward-looking statements, identifying them by specific terminology and cautioning that they are not guarantees of future performance, highlighting that actual results could differ materially due to various risks and uncertainties - Statements not historical facts are forward-looking statements, identifiable by words like 'anticipates,' 'expects,' 'intends,' 'plans,' 'projects,' 'believes,' 'estimates,' 'forecasts,' 'likely,' 'possibly,' 'probably,' 'could,' 'goal,' 'opportunity,' 'objective,' 'target,' 'assume,' 'outlook,' 'guidance,' 'predicts,' 'appears,' 'indicator' and similar expressions[14](index=14&type=chunk) - Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that cannot be predicted, with actual results potentially differing materially from those stated[14](index=14&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements unless required by applicable securities laws[16](index=16&type=chunk) [Risk Factors](index=3&type=section&id=Risk%20Factors) The report outlines numerous risk factors that could materially affect Insperity's operations and financial results, including adverse economic conditions, volatility in healthcare and workers' compensation costs, regulatory changes, competitive pressures, and the ability to execute strategic partnerships - Key risk factors include adverse economic conditions, labor shortages, increasing competition for skilled workers, and the impact of inflation[14](index=14&type=chunk) - Increases in health insurance costs and workers' compensation rates, underlying claims trends, and health care reform pose significant risks[14](index=14&type=chunk) - The impact of the competitive environment and other developments in the human resources services industry, including the PEO industry, could affect growth and profitability[14](index=14&type=chunk) - Risks also include disruptions of information technology systems, failure to enhance service and technology offerings, and liability or damage to reputation from data theft or cyberattacks[14](index=14&type=chunk)[17](index=17&type=chunk) - The ability to fully realize the anticipated benefits of the strategic partnership and plans to develop a joint solution with Workday, Inc. is also a risk factor[17](index=17&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents Insperity's condensed consolidated balance sheets, statements of operations, and key financial data per WSEE, detailing asset and liability changes, revenue composition, and profitability metrics [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets from $2,597 million at December 31, 2024, to $2,143 million at March 31, 2025, primarily driven by a reduction in cash and cash equivalents, with total liabilities also decreasing while stockholders' equity saw a modest increase Condensed Consolidated Balance Sheets (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total assets | $2,143 | $2,597 | | Cash and cash equivalents | $551 | $1,039 | | Accounts receivable, net | $834 | $829 | | Total current assets | $1,654 | $2,085 | | Total liabilities | $2,024 | $2,500 | | Payroll taxes and other payroll deductions payable | $457 | $901 | | Accrued health insurance costs | $68 | $19 | | Total current liabilities | $1,466 | $1,930 | | Total stockholders' equity | $119 | $97 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, revenues increased by 3% year-over-year, but gross profit declined by 10% due to a 7% increase in payroll taxes, benefits, and workers' compensation costs, resulting in significant decreases in operating income and net income Consolidated Statements of Operations (Three Months Ended March 31, in millions) | Metric | 2025 | 2024 | Change | | :------------------------------------------ | :--- | :--- | :----- | | Revenues | $1,863 | $1,802 | 3% | | Payroll taxes, benefits and workers' compensation costs | $1,553 | $1,457 | 7% | | Gross profit | $310 | $345 | (10)% | | Total operating expenses | $242 | $237 | 2% | | Operating income | $68 | $108 | (37)% | | Net income | $51 | $79 | (35)% | | Diluted EPS | $1.35 | $2.08 | (35)% | Revenue Composition (Three Months Ended March 31, in millions) | Metric | 2025 | 2024 | | :------------------ | :----- | :----- | | Gross billings | $12,144 | $11,483 | | Less: WSEE payroll cost | $10,281 | $9,681 | | Revenues | $1,863 | $1,802 | [Key Financial and Statistical Data (Per WSEE)](index=7&type=section&id=Key%20Financial%20and%20Statistical%20Data%20%28Per%20WSEE%29) Per WSEE per month data for Q1 2025 shows a 3% increase in revenues but an 11% decrease in gross profit, reflecting the higher benefits costs, with operating income and net income per WSEE also experiencing significant declines of 37% and 36%, respectively Key Financial and Statistical Data (Per WSEE per month, Three Months Ended March 31) | Metric | 2025 | 2024 | Change | | :---------------------- | :----- | :----- | :----- | | Average WSEEs paid | 306,023 | 303,904 | 1% | | Revenues | $2,029 | $1,977 | 3% | | Gross profit | $338 | $378 | (11)% | | Operating expenses | $264 | $260 | 2% | | Operating income | $74 | $118 | (37)% | | Net income | $56 | $87 | (36)% | Revenues per WSEE per month composition (Three Months Ended March 31) | Metric | 2025 | 2024 | | :---------------------- | :----- | :----- | | Gross billings | $13,228 | $12,595 | | Less: WSEE payroll cost | $11,199 | $10,618 | | Revenues | $2,029 | $1,977 | [Non-GAAP Financial Measures & Reconciliations](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) This section defines Insperity's non-GAAP financial measures and provides detailed reconciliations from GAAP to non-GAAP figures for Q1 2025 results and 2025 guidance [Non-GAAP Measures Overview and Definitions](index=8&type=section&id=Non-GAAP%20Measures%20Overview%20and%20Definitions) This section provides an overview of Insperity's non-GAAP financial measures, emphasizing that they are not GAAP-compliant and should not be considered substitutes, including definitions for non-bonus payroll cost, adjusted cash, EBITDA, adjusted EBITDA, adjusted net income, and adjusted EPS, explaining their utility for investors and management - Non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP measures[21](index=21&type=chunk) - Non-bonus payroll cost excludes bonus payrolls paid to WSEEs, used by management for analyzing, reporting, and forecasting workers' compensation costs[22](index=22&type=chunk) - Adjusted cash, cash equivalents, and marketable securities exclude funds associated with federal and state income tax withholdings, employment taxes, other payroll deductions, and client prepayments[22](index=22&type=chunk) - Adjusted EBITDA represents GAAP net income plus interest expense, income taxes, depreciation and amortization expense, amortization of SaaS implementation costs, and non-cash stock-based compensation, used by management and lenders to assess performance and leverage[22](index=22&type=chunk) - Adjusted EPS represents diluted net income per share computed in accordance with GAAP, excluding non-cash stock-based compensation[22](index=22&type=chunk) [Reconciliations of Q1 2025 Non-GAAP Measures](index=9&type=section&id=Reconciliations%20of%20Q1%202025%20Non-GAAP%20Measures) This section provides detailed reconciliations of GAAP to non-GAAP financial measures for the first quarter of 2025 and 2024, showing the adjustments made to payroll cost, cash, net income, and diluted EPS to arrive at their respective non-GAAP counterparts, highlighting the impact of items like bonus payroll and stock-based compensation Reconciliation of Payroll Cost (GAAP) to Non-bonus Payroll Costs (non-GAAP) (in millions) | Metric | 2025 | 2024 | | :-------------------- | :----- | :----- | | Payroll cost | $10,281 | $9,681 | | Less: Bonus payroll cost | $2,243 | $1,862 | | Non-bonus payroll cost | $8,038 | $7,819 | | Payroll cost % change YoY | 6% | — | | Non-bonus payroll cost % change YoY | 3% | 2% | Reconciliation of Cash, Cash Equivalents and Marketable Securities (GAAP) to Adjusted Cash (non-GAAP) (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | Cash, cash equivalents and marketable securities | $568 | $1,055 | | Less: Amounts payable for withheld taxes & deductions | $404 | $830 | | Less: Client prepayments | $40 | $91 | | Adjusted cash, cash equivalents and marketable securities | $124 | $134 | Reconciliation of Net Income (GAAP) to Adjusted EBITDA (non-GAAP) (in millions) | Metric | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Net income | $51 | $79 | | EBITDA | $91 | $132 | | Stock-based compensation | $11 | $10 | | Adjusted EBITDA | $102 | $142 | | Net income % change YoY | (35)% | (17)% | | Adjusted EBITDA % change YoY | (28)% | (7)% | Reconciliation of Diluted EPS (GAAP) to Adjusted EPS (non-GAAP) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Diluted EPS | $1.35 | $2.08 | | Non-GAAP adjustments, net | $0.22 | $0.19 | | Adjusted EPS | $1.57 | $2.27 | | Diluted EPS % change YoY | (35)% | (15)% | | Adjusted EPS % change YoY | (31)% | (15)% | [Reconciliations of 2025 Guidance Non-GAAP Measures](index=11&type=section&id=Reconciliations%20of%202025%20Guidance%20Non-GAAP%20Measures) This section provides the reconciliation of GAAP to non-GAAP financial measures specifically for the second quarter and full year 2025 guidance, detailing the adjustments made to projected net income and diluted EPS to arrive at the adjusted EBITDA and adjusted EPS guidance figures Reconciliation of GAAP to Non-GAAP Financial Measures for Q2 and Full Year 2025 Guidance (in millions, except per share amounts) | Metric | Q2 2025 Guidance | Full Year 2025 Guidance | | :-------------------------- | :--------------- | :---------------------- | | Net income (loss) | $(3) - $11 | $42 - $81 | | EBITDA | $14 - $34 | $130 - $185 | | Stock-based compensation | $19 | $60 | | Adjusted EBITDA | $33 - $53 | $190 - $245 | | Diluted EPS | $(0.07) - $0.31 | $1.10 - $2.15 | | Non-GAAP adjustments, net | $0.36 | $1.13 | | Adjusted EPS | $0.29 - $0.67 | $2.23 - $3.28 |

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].

Q4 2024 Performance - Q4 average paid worksite employees declined by 2%[7] - Early momentum in the fall selling season generated a 37% increase in WSEEs paid from new sales in Q4 2024 vs Q4 2023[7] - Client retention averaged 99%[7] - Adjusted EBITDA decreased by 59% and Adjusted EPS decreased by 93% due to a 2% decrease in paid worksite employees and investment in the Workday strategic partnership[9] FY 2024 Performance - Average paid worksite employees decreased by 2% due to macroeconomic uncertainty[12] - Worksite employees paid from new client sales increased 2% compared to 2023[12] - Client retention declined 2% compared to 2023[12] - Adjusted EBITDA declined by 24% and Adjusted EPS declined by 35%[14] - Operating expenses include $57 million associated with the investment in the Workday strategic partnership[15] 2025 Outlook - Q1 2025 average WSEEs paid are expected to be between 306,500 and 309,000, representing a year-over-year increase of 09% to 17%[18] - FY 2025 average WSEEs paid are expected to be between 313,400 and 319,500, representing a year-over-year increase of 20% to 40%[18] - FY 2025 Adjusted EBITDA is projected to be between $240 million and $285 million, a year-over-year change of -11% to 6%[18]

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].