Financial Data and Key Metrics Changes - Total revenue for Q3 was down 2% year-over-year, reflecting a decline in WSE volume but supported by prudent benefit repricing and higher interest income [19][20] - The company finished the quarter with approximately 332,000 total WSEs, down 7% year-over-year, and 302,000 co-employed WSEs, down 9% [20] - Adjusted earnings per diluted share was $1.11, with GAAP earnings per share at $0.70, supported by improved cash flow [25][26] Business Line Data and Key Metrics Changes - Professional services revenue declined 8% year-over-year due to lower WSE volumes and the discontinuation of a specific client-level technology fee [22] - ASO revenues continued to exceed initial forecasts, indicating ongoing demand despite a slight decrease in HRIS fees [23] - Insurance revenue and costs each declined by 1%, resulting in an insurance cost ratio just over 90% [24] Market Data and Key Metrics Changes - The company noted that attrition was elevated compared to last year due to repricing efforts, with health plan pricing cited as the primary reason for client terminations [12][20] - CIE was flat compared to last year, with a slight year-to-date improvement driven mainly by the tech vertical and financial services [21][46] Company Strategy and Development Direction - The medium-term strategy aims for total revenues to achieve a compounded annual growth rate of 4%-6% and adjusted EBITDA margins to expand to 10%-11% [8] - The company is focusing on generating sustainable growth and improving service delivery, with a recent launch of an AI-powered HR suite [12][15] - The preferred broker program is generating a growing share of broker-driven RFPs, increasing optimism for Q4 and 2026 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to return the insurance cost ratio below the top end of the long-term range of 87%-90% by 2026 [16] - Despite challenging market conditions, management noted strong execution in areas they control and an improving outlook [8][28] - The company is optimistic about the January pipeline and expects improvement in year-over-year performance in Q4 [14][28] Other Important Information - The company repurchased stock and paid dividends totaling $45 million in the quarter, with a 10% increase in dividends year-over-year [17][26] - The leadership transition was highlighted, with a new CFO set to join, and the outgoing CFO thanked for her contributions [5][18] Q&A Session Summary Question: Clarification on insurance cost ratio and assumptions for FY2026 - Management indicated no notable one-time impacts in Q3 performance and plans to remain conservative regarding healthcare trends for next year [30][35] Question: Update on sales headcount expectations for FY2025 - The company expects to see an increase in sales headcount in 2026 as new trainees come on board, with a focus on experienced hires [36][37] Question: Insights on rate increases and pricing relative to competition - Management noted that the pricing gap is tightening, with evidence from the pipeline and channel partners indicating improved conditions [40][41] Question: Client decision-making and business optimism - Management observed a settling in client decision-making, with healthcare costs being central to PEO buy decisions [42][43] Question: Update on ASO offering and competitive landscape - The company has seen better-than-expected interest in ASO offerings, with a competitive advantage in combining strong technology and support [62][64] Question: Guidance and unknowns affecting revenue and EPS - Management does not expect unusual impacts in Q4, with minor fluctuations in the insurance cost ratio being the largest potential swing factor [66] Question: CIE growth and pricing discrepancy - CIE is expected to be low single-digit positive for the year, with less layoffs contributing to the improvement [71][75]