Insperity(NSP) - 2025 Q2 - Quarterly Results

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