CBIZ(CBZ) - 2025 Q2 - Quarterly Results

Executive Summary & Business Highlights CBIZ reported strong financial performance in Q2 and H1 2025, driven by significant revenue and earnings growth, largely attributed to the strategic Marcum acquisition Second Quarter 2025 Highlights CBIZ reported strong financial results for the second quarter of 2025, driven by significant revenue growth and substantial increases in both GAAP and Adjusted earnings, largely attributed to the Marcum acquisition Second Quarter Financial Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | Total Revenue | $683.5 million | $420.0 million | 62.7% | | Net Income | $41.9 million | $19.8 million | 111.9% | | GAAP EPS | $0.66 | $0.39 | 69.2% | | Adjusted EBITDA | $117.2 million | $51.4 million | 127.9% | | Adjusted Diluted EPS | $0.95 | $0.58 | 63.8% | - The Marcum acquisition was highlighted as a monumental and value-creating strategic decision, contributing to the strong performance[4] Six-Month 2025 Highlights For the first six months of 2025, CBIZ continued its robust growth trajectory, reporting significant increases across all key financial metrics, reflecting the positive impact of strategic initiatives and business resilience Six-Month Financial Performance | Metric | H1 2025 | H1 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | Total Revenue | $1.5 billion | $914.3 million | 66.4% | | Net Income | $164.7 million | $96.7 million | 70.4% | | GAAP EPS | $2.58 | $1.92 | 34.4% | | Adjusted EBITDA | $355.6 million | $170.2 million | 108.9% | | Adjusted Diluted EPS | $3.26 | $2.22 | 46.8% | CEO Commentary CEO Jerry Grisko expressed satisfaction with the strong earnings, emphasizing the business model's resilience and the strategic importance of the Marcum acquisition. He highlighted the company's focus on essential, recurring services, strong client retention, robust free cash flow, and disciplined cost management as foundations for future growth - CEO Jerry Grisko noted strong earnings in Q2 and year-to-date, demonstrating business model strength and resilience amid challenging market conditions[3] - The Marcum acquisition is considered one of the most important and value-creating strategic decisions in CBIZ's history[4] - CBIZ is well-positioned for future growth due to essential, recurring services, strong client retention, robust free cash flow, and disciplined cost management[4] Company Information CBIZ, Inc. is a national professional services advisor to middle-market businesses, providing a range of services across numerous locations and outlining its financial projections for 2025 About CBIZ CBIZ, Inc. is a national professional services advisor to middle-market businesses, offering expertise in accounting, tax, advisory, benefits, insurance, and technology. The company operates across more than 160 locations in 22 major markets with over 10,000 team members - CBIZ, Inc. (NYSE: CBZ) is a leading professional services advisor to middle-market businesses nationwide[10] - Services include accounting, tax, advisory, benefits, insurance, and technology, delivering actionable insights to clients[10] - CBIZ has over 10,000 team members across more than 160 locations in 22 major markets[10] 2025 Outlook CBIZ provided its financial outlook for the full year 2025, projecting revenue between $2.8 billion and $2.95 billion, with specific guidance for GAAP and Adjusted EPS, effective tax rate, and Adjusted EBITDA Full Year 2025 Guidance | Metric | Range (Low) | Range (High) | | :----------------------------------- | :---------- | :----------- | | Total Revenue | $2.8 billion | $2.95 billion | | Effective Tax Rate | ~29% | ~29% | | Weighted Average Fully Diluted Shares | 64.5 million | 65.0 million | | GAAP Fully Diluted EPS | $1.97 | $2.02 | | Adjusted Fully Diluted EPS | $3.60 | $3.65 | | Adjusted EBITDA | $450 million | $456 million | Conference Call Details CBIZ hosted a conference call on July 30, 2025, at 5 p.m. (ET) to discuss its second-quarter financial results, with an archived replay available on its investor relations website - CBIZ hosted a conference call on July 30, 2025, at 5 p.m. (ET) to discuss Q2 financial results[9] - The call was webcast, and an archived replay is available at **https://cbiz.gcs-web.com/investor-overview**[9](index=9&type=chunk) Financial Statements (Unaudited) This section presents CBIZ's unaudited financial statements, including detailed income statements, segment data, cash flow, and key financial ratios for Q2 and H1 2025 Three Months Ended June 30, 2025 and 2024 CBIZ's income statement for Q2 2025 shows significant growth in revenue and net income compared to Q2 2024, with detailed breakdowns of operating expenses, other income, and the impact of the deferred compensation plan Income Statement Highlights (Q2, in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % of Revenue 2025 | % of Revenue 2024 | | :---------------------------------- | :--------------------- | :--------------------- | :---------------- | :---------------- | | Revenue | $683,496 | $420,012 | 100.0% | 100.0% | | Operating expenses | $595,587 | $366,368 | 87.1% | 87.2% | | Gross margin | $87,909 | $53,644 | 12.9% | 12.8% | | Corporate general and administrative expenses | $27,637 | $22,050 | 4.0% | 5.2% | | Operating income | $60,272 | $31,594 | 8.9% | 7.6% | | Interest expense | $(27,867) | $(5,884) | (4.1)% | (1.4)% | | Other income, net | $25,374 | $2,483 | 3.7% | 0.6% | | Income before income tax expense | $57,779 | $28,193 | 8.5% | 6.8% | | Income tax expense | $15,837 | $8,400 | | | | Net income | $41,942 | $19,793 | 6.1% | 4.7% | | Diluted earnings per share | $0.66 | $0.39 | | | | Diluted weighted average common shares outstanding | 63,784 | 50,276 | | | | Adjusted EBITDA | $117,153 | $51,406 | 17.1% | 12.2% | | Adjusted Diluted EPS | $0.95 | $0.58 | | | - Other income, net for Q2 2025 included a $12.5 million gain from a legal settlement[23] Six Months Ended June 30, 2025 and 2024 The six-month income statement for 2025 demonstrates substantial revenue and net income growth, alongside improved operating margins, with detailed adjustments for deferred compensation and other income Income Statement Highlights (Six Months, in thousands) | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | % of Revenue 2025 | % of Revenue 2024 | | :---------------------------------- | :--------------------- | :--------------------- | :---------------- | :---------------- | | Revenue | $1,521,510 | $914,309 | 100.0% | 100.0% | | Operating expenses | $1,205,499 | $742,853 | 79.2% | 81.2% | | Gross margin | $316,011 | $171,456 | 20.8% | 18.8% | | Corporate general and administrative expenses | $55,707 | $40,761 | 3.7% | 4.5% | | Operating income | $260,304 | $130,695 | 17.1% | 14.3% | | Interest expense | $(53,023) | $(10,395) | (3.5)% | (1.1)% | | Other income, net | $23,408 | $11,907 | 1.5% | 1.3% | | Income before income tax expense | $230,689 | $132,207 | 15.1% | 14.5% | | Income tax expense | $65,974 | $35,530 | | | | Net income | $164,715 | $96,677 | 10.8% | 10.6% | | Diluted earnings per share | $2.58 | $1.92 | | | | Diluted weighted average common shares outstanding | 63,960 | 50,248 | | | | Adjusted EBITDA | $355,569 | $170,236 | 23.4% | 18.6% | | Adjusted EPS | $3.26 | $2.22 | | | - Other income, net for the six months ended June 30, 2025, included a $12.5 million gain from a legal settlement[28] Select Segment Data CBIZ's segment data reveals that Financial Services is the largest contributor to both revenue and gross margin, showing significant growth in Q2 and the first six months of 2025, while Benefits and Insurance Services also contributed positively Revenue by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------ | :---------- | :---------- | :---------- | :---------- | | Financial Services | $569,819 | $309,233 | $1,283,480 | $681,863 | | Benefits and Insurance Services | $101,929 | $97,419 | $214,905 | $205,827 | | National Practices | $11,748 | $13,360 | $23,125 | $26,619 | | Total Revenue | $683,496| $420,012| $1,521,510| $914,309| Gross Margin by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------ | :---------- | :---------- | :---------- | :---------- | | Financial Services | $85,361 | $46,424 | $288,529 | $153,493 | | Benefits and Insurance Services | $17,922 | $14,176 | $45,540 | $38,947 | | National Practices | $1,267 | $1,332 | $2,379 | $2,658 | | Operating expenses - unallocated | $(16,641) | $(8,288) | $(20,437) | $(23,642) | | Total Gross Margin | $87,909 | $53,644 | $316,011| $171,456| Select Cash Flow Data For the six months ended June 30, 2025, CBIZ reported a slight increase in net cash provided by operating activities, while net cash used in investing and financing activities also saw changes, resulting in a net decrease in cash, cash equivalents, and restricted cash Cash Flow Highlights (Six Months, in thousands) | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | | :-------------------------------------------------- | :--------------------- | :--------------------- | | Net income | $164,715 | $96,677 | | Net cash provided by operating activities | $24,880 | $24,439 | | Net cash used in investing activities | $(12,299) | $(33,247) | | Net cash used in financing activities | $(33,249) | $(11,920) | | Net decrease in cash, cash equivalents and restricted cash | $(20,668) | $(20,728) | | Cash, cash equivalents and restricted cash at end of period | $166,502 | $136,420 | Select Financial Data and Ratios CBIZ's balance sheet as of June 30, 2025, shows an increase in total assets and stockholders' equity compared to December 31, 2024, with a slight increase in the debt-to-equity ratio and Days Sales Outstanding (DSO) Balance Sheet and Ratios (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------------------- | :--------------------------- | :------------------------------- | | Cash and cash equivalents | $39,817 | $13,826 | | Accounts receivable, net | $676,054 | $534,858 | | Total assets | $4,537,973 | $4,470,883 | | Total liabilities | $2,646,130 | $2,690,900 | | Total stockholders' equity | $1,891,843 | $1,779,983 | | Debt to equity | 82.2% | 78.6% | | Days sales outstanding (DSO) | 87 | 73 | - DSO increased from 73 days at December 31, 2024, to 87 days at June 30, 2025, and was 95 days at June 30, 2024[37] Non-GAAP Financial Measures This section explains CBIZ's non-GAAP financial measures and provides detailed reconciliations to GAAP for Q2, H1 2025, and full-year 2025 guidance Explanation of Non-GAAP Measures CBIZ uses non-GAAP financial measures such as Adjusted Net Income (Loss), Adjusted Diluted EPS, and Adjusted EBITDA to supplement GAAP results. These measures exclude the impact of the Marcum acquisition, integration costs, amortization of acquired intangible assets, and other non-recurring gains and losses to provide a clearer view of ongoing operational performance - Non-GAAP measures (Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA) are used to supplement GAAP financial statements[17] - These measures exclude the impact of the Marcum acquisition, integration costs, amortization of acquired intangible assets, and other significant non-operating related gains and losses[17] - Management uses these non-GAAP measures for financial and operational decision-making, evaluating employee compensation targets, and providing meaningful supplemental information to stakeholders[18] GAAP Reconciliation: Three Months Ended June 30, 2025 and 2024 The reconciliation for the second quarter shows the adjustments made to GAAP Net Income and EPS to arrive at Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA, primarily excluding acquisition-related integration costs, amortization of intangibles, and a litigation gain Q2 GAAP to Adjusted Reconciliation (in thousands, except per share data) | Metric | Q2 2025 (Consolidated) | Q2 2025 (EPS) | Q2 2024 (Consolidated) | Q2 2024 (EPS) | | :---------------------------------- | :--------------------- | :------------ | :--------------------- | :------------ | | Net income (loss) | $41,942 | $0.66 | $19,793 | $0.39 | | Adjustments: | | | | | | Integration costs related to acquisitions | $19,163 | $0.31 | $6,981 | $0.14 | | Amortization of acquired intangible assets | $18,790 | $0.29 | $6,020 | $0.12 | | Litigation gain, net | $(11,859) | $(0.19) | N/A | N/A | | Litigation cost | N/A | N/A | $723 | $0.01 | | Income tax effect related to adjustments | $(7,552) | $(0.12) | $(4,114) | $(0.08) | | Adjusted net income (loss) | $60,484 | $0.95 | $29,488 | $0.58 | | Interest expense | $27,867 | | $5,884 | | | Income tax expense | $15,837 | | $8,400 | | | Tax effect related to the adjustments above | $7,552 | | $4,114 | | | Depreciation | $5,413 | | $3,520 | | | Adjusted EBITDA | $117,153 | | $51,406 | | - Integration costs for 2025 primarily relate to the Marcum acquisition, while 2024 costs were for Erickson, Brown & Kloster, LLC and CompuData, Inc. acquisitions[43] - A $12.5 million gain from a legal settlement was recorded in Q2 2025, impacting 'Other income (expense), net'[43] GAAP Reconciliation: Six Months Ended June 30, 2025 and 2024 The six-month reconciliation details the adjustments to GAAP Net Income and EPS to derive Adjusted figures, highlighting the significant impact of acquisition-related costs and a legal settlement gain on the reported results H1 GAAP to Adjusted Reconciliation (in thousands, except per share data) | Metric | H1 2025 (Consolidated) | H1 2025 (EPS) | H1 2024 (Consolidated) | H1 2024 (EPS) | | :---------------------------------- | :--------------------- | :------------ | :--------------------- | :------------ | | Net income (loss) | $164,715 | $2.58 | $96,677 | $1.92 | | Adjustments: | | | | | | Integration costs related to acquisitions | $34,855 | $0.54 | $7,563 | $0.15 | | Amortization of acquired intangible assets | $37,456 | $0.59 | $11,965 | $0.24 | | Litigation gain, net | $(11,063) | $(0.17) | N/A | N/A | | Litigation cost | N/A | N/A | $723 | $0.01 | | Income tax effect related to adjustments | $(17,516) | $(0.28) | $(5,534) | $(0.11) | | Adjusted net income (loss) | $208,447 | $3.26 | $111,734 | $2.22 | | Interest expense | $53,023 | | $10,395 | | | Income tax expense | $65,974 | | $35,530 | | | Tax effect related to the adjustments above | $17,516 | | $5,534 | | | Depreciation | $10,609 | | $7,043 | | | Adjusted EBITDA | $355,569 | | $170,236 | | - A $12.5 million gain from a legal settlement was recorded for the six months ended June 30, 2025[47] GAAP Reconciliation: Full Year 2025 Guidance CBIZ provided a reconciliation for its full-year 2025 guidance, outlining the adjustments from GAAP Net Income and EPS to Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA, primarily due to amortization of acquired intangibles and integration costs related to acquisitions Full Year 2025 Guidance Reconciliation (in millions, except per share data) | Metric | Low Amounts | EPS (Low) | High Amounts | EPS (High) | | :----------------------------------- | :---------- | :-------- | :----------- | :--------- | | GAAP Net Income | $127.9 | $1.97 | $131.1 | $2.02 | | Amortization of acquired intangible assets | $75.1 | $1.15 | $75.1 | $1.15 | | Integration costs related to acquisitions | $75.0 | $1.15 | $75.0 | $1.15 | | Income tax effect related to adjustments | $(43.5) | $(0.67) | $(43.5) | $(0.67) | | Adjusted Net Income | $234.5 | $3.60 | $237.7 | $3.65 | | Depreciation | $22.1 | | $22.1 | | | Interest expense | $99.3 | | $99.3 | | | Income tax expense included the tax effect related to the adjustments above | $94.5 | | $97.1 | | | Adjusted EBITDA | $450.4 | | $456.2 | | - Amortization of acquired intangible assets and integration costs related to acquisitions are key adjustments for the full year 2025 guidance[48][49] Forward-Looking Statements & Risk Factors This section outlines the nature of forward-looking statements within the release, emphasizing that actual results may differ materially due to various risks and uncertainties. Key risks include slower-than-expected receivable payments, Marcum acquisition performance, dependence on key employees, regulatory restrictions, goodwill impairment, and integration costs - The release contains forward-looking statements regarding financial position, business strategy, and future performance, identifiable by terms like 'will,' 'expect,' and 'anticipate'[11] - Actual results could differ materially from projections due to various risks and uncertainties[13][15] - Key risks include: Marcum acquisition performance, dependence on executive officers, restrictions from independence requirements, goodwill impairment, failure to realize acquisition benefits, SEC/PCAOB sanctions against Marcum, internal control issues post-acquisition, inability to finance new acquisitions, integration costs, changes in governmental regulations, healthcare environment changes, cyberattacks, and reliance on information processing systems[13][14] - Further detailed risk factors are available in the Annual Report on Form 10-K for the year ended December 31, 2024[16] Contacts Contact information for media and investor relations inquiries is provided for CBIZ, Inc. - Media Contact: Amy McGahan, Director of Corporate & Strategic Communications, amy.mcgahan@cbiz.com[50] - Investor Relations Contact: Lori Novickis, Director, Corporate Relations, lnovickis@cbiz.com[50]