Financial Data and Key Metrics Changes - The company reported Q2 2025 EPS of $0.26 and adjusted EBITDA of $32 million, slightly below the forecasted range due to higher than expected benefits costs [5][6] - Average paid worksite employees increased by 0.7% year-over-year to 309,115, with new sales contributing to a 2% increase in worksite employees [5][6] - Gross profit per worksite employee decreased to $240 per month from $282 in 2024, primarily due to increased benefits costs [6][7] - Benefits costs per covered employee increased by 9.6% year-over-year in Q2 and by 9% year-to-date [7][8] Business Line Data and Key Metrics Changes - Client renewals averaged 99% per month, consistent with prior year results, indicating strong client retention [5][6] - Net hiring within the client base showed improvement, slightly exceeding expectations and Q2 2024 levels, but still below historical norms [6][7] Market Data and Key Metrics Changes - The company noted that large claim frequency remains elevated, particularly for cancer and heart-related conditions, but did not observe adverse selection among new clients [7][8] - The overall economic environment for small and medium-sized businesses is showing signs of stabilization, which may lead to improved hiring trends [25][28] Company Strategy and Development Direction - The company is focused on executing plans to improve profitability in 2026 through pricing increases, plan design changes, and contract negotiations with UHC [9][10] - A new HR solution portfolio was announced, including Insperity HR 360, Insperity HR Core, and Insperity HR Scale, aimed at expanding the total addressable market [17][18] - The company is investing in AI capabilities to enhance service delivery and operational efficiency [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving accelerated growth and improved profitability in 2026 despite current challenges [14][25] - The company is optimistic about the potential for recovery in gross profit margins and operating expense management [26][30] - Recent federal legislation is seen as a catalyst for expansion in the SMB community, potentially improving hiring trends [25][28] Other Important Information - Operating expenses decreased by 3% year-over-year, with significant reductions in travel and professional fees [12] - The company returned $22 million in cash dividends to shareholders during the quarter and repurchased 224,000 shares at a cost of $19 million [12] Q&A Session Summary Question: Financial impact of Workday partnership in 2026 - Management indicated it is too early to predict the exact revenue and profitability impact from the Workday partnership, but they are excited about the progress [35][36] Question: Net client hiring dynamics - There has been an improvement in underlying hiring levels, although still below historical norms, with expectations for continued improvement [42][43] Question: Investment visibility and expenses related to Workday - The original $150 million investment is still considered appropriate, with expectations that some expenses will become capitalizable as the product nears launch [47][48] Question: Healthcare cost management strategies - Pricing changes are the primary method to manage rising healthcare costs, with plan design changes and contract negotiations as secondary strategies [65][66] Question: Timing for broader marketing efforts - Broader marketing efforts are expected to ramp up in 2026, following the beta testing phases [71][72]