Financial Performance - Q3 2025 - Q3 average paid worksite employees increased by 1%[8] - Adjusted EBITDA decreased by 74%[11] - Adjusted EPS decreased by 151%[11] - Operating expenses decreased by 4% compared to Q3 2024[13] Financial Performance - YTD September 2025 - Average paid worksite employees increased by 1%[15] - Adjusted EBITDA decreased by 42%[18] - Adjusted EPS decreased by 54%[18] Balance Sheet and Cash Flow - Adjusted Cash was $120 million as of September 30, 2025[20] - Total Debt was $369 million as of September 30, 2025[20] - Adjusted EBITDA was $144 million YTD September 30, 2025[20] Q4 and FY 2025 Outlook - Q4 2025 Adjusted EBITDA is projected at $(25) million, a decrease of 209% year-over-year[22] - FY 2025 Adjusted EBITDA is projected between $119 million and $153 million, a decrease of 56% to 43% year-over-year[22] - FY 2025 Adjusted EPS is projected between $0.84 and $1.47, a decrease of 77% to 59% year-over-year[22]

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]

Financial Data and Key Metrics Changes - Gross billings increased by 9.5% year-over-year to $2.09 billion in Q1 2025 compared to $1.91 billion in Q1 2024 [17] - PEO gross billings rose by 10% to $2.07 billion, while staffing revenues declined by 10% to $18 million [17] - Average billing per worksite employee (WSE) increased by 2.6% in the quarter [18] - The net loss per diluted share was $0.04 compared to a net loss of $0.01 per diluted share in the same quarter last year [23] Business Line Data and Key Metrics Changes - Worksite employees grew by 7.6% in the quarter, driven by a record number of new client additions [18] - Staffing operations experienced a decline of 10% year-over-year, attributed to macroeconomic headwinds [6][17] - The company added approximately 7,900 worksite employees year-over-year from net new clients [5] Market Data and Key Metrics Changes - The East Coast region saw a growth of 14%, Southern California grew by 11%, Mountain region by 9%, Northern California by 6%, while the Pacific Northwest declined by 1% [19] - Southern California represents the largest region for the company, achieving double-digit growth due to consistent client additions and hiring [19] Company Strategy and Development Direction - The company is focusing on geographic expansion with plans to open new physical locations in Chicago, Dallas, and Nashville by early Q3 [8][31] - Investments in new markets and product offerings, including a new health insurance product, are expected to drive future growth [9][10] - The company aims to enhance the employee life cycle experience through technology investments and product launches throughout the year [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, noting potential impacts on client hiring and investment [14][15] - Despite a strong start to the year, the company is maintaining its outlook for billings growth and worksite employee growth due to economic uncertainties [24] - The company believes that small businesses benefit from PEO relationships during challenging times, positioning itself for sustainable growth [15] Other Important Information - The company repurchased $9 million of shares in Q1 under its $75 million repurchase program [24] - The company paid $2.1 million in dividends during the quarter and reaffirmed its dividend for the following quarter [24] Q&A Session Summary Question: What percentage of clients have direct tariff exposure? - Management indicated that most clients are in service industries with minimal direct exposure, primarily facing indirect impacts from increased material costs [28] Question: Is there an annual goal for new physical offices? - Management stated that the number of new physical locations depends on market development rather than a fixed annual target [30] Question: How much growth could come from geographic expansion over the next five years? - Management views geographic expansion as a long-term investment, expecting profitability to materialize in year three and beyond [34] Question: Are existing clients or new clients driving growth in benefits? - The company has seen a shift towards a more balanced contribution from both existing and new clients in the benefits segment [42] Question: Is the company displacing more legacy PEOs than before? - Management noted that while many new clients are first-time PEO users, there is an increase in PEO takeaways in certain markets [46] Question: How is pricing trending in the current economic backdrop? - Management reported that workers' compensation pricing has moderated, with minimal fluctuations expected [54]

Financial Data and Key Metrics Changes - Gross billings increased by 9.5% year-over-year to $2.09 billion in Q1 2025 compared to $1.91 billion in Q1 2024 [17] - PEO gross billings rose by 10% to $2.07 billion, while staffing revenues declined by 10% to $18 million [17] - Average billing per worksite employee (WSE) increased by 2.6% in the quarter [18] - The company reported a net loss per diluted share of $0.04 compared to a net loss of $0.01 per diluted share in the same quarter last year [23] Business Line Data and Key Metrics Changes - The number of PEO worksite employees grew by 7.6% in the quarter, driven by a record number of new client additions [18] - Staffing operations experienced a decline of 10% year-over-year, attributed to macroeconomic headwinds [6][17] - The company added approximately 7,900 worksite employees year-over-year from net new clients [5] Market Data and Key Metrics Changes - The East Coast region saw a 14% growth in PEO gross billings, while Southern California grew by 11% [19] - The Pacific Northwest region, however, experienced a decline of 1% in gross billings [19] - Total hours and overtime hours increased modestly year-over-year, indicating stability in client operations [18] Company Strategy and Development Direction - The company is focusing on geographic expansion with plans to open new physical locations in Chicago, Dallas, and Nashville by early Q3 [8][31] - Investments in technology and product enhancements are ongoing, including the launch of a new applicant tracking system [11][63] - The company aims to enhance the employee life cycle experience through additional product launches throughout the year [11] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, noting potential impacts on client hiring and investment [14][24] - Despite a strong start to the year, the company is maintaining its outlook for gross billings growth between 7% to 9% for the year [24] - The company believes that small businesses benefit from PEO relationships during challenging economic times, positioning itself for sustainable growth [15] Other Important Information - The company repurchased $9 million of shares in Q1 under its $75 million repurchase program [24] - The balance sheet remains strong with $99 million in unrestricted cash and investments and no debt [23] Q&A Session Summary Question: What percentage of clients have direct tariff exposure? - Management indicated that most clients are service businesses with indirect exposure to tariffs, primarily affecting materials and supplies [28] Question: Is there an annual goal for new physical offices? - Management stated that the number of new physical locations depends on market development rather than a fixed annual target [30] Question: How much is the benefits side driving new client growth? - The benefits offering has shifted to a more balanced contribution between existing and new clients, with significant success in attracting new clients [41][42] Question: Are there any areas that have not performed as expected? - Management acknowledged that while there are ongoing investments in technology, some products may take longer to gain traction [65]

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]

Financial Data and Key Metrics Changes - For Q4 2024, gross billings increased by 10% to $2.25 billion compared to $2.05 billion in Q4 2023, while diluted earnings per share rose by 17% to $0.63 from $0.54 in the prior year quarter [20] - For the full year 2024, gross billings grew by 7.9% to $8.3 billion from $7.7 billion in the previous year, and diluted earnings per share increased by 7% to $1.98 from $1.85 [21] - Average billing per worksite employee (WSE) increased by 3.3% in Q4 [22] Business Line Data and Key Metrics Changes - PEO (Professional Employer Organization) gross billings increased by 10% in Q4, while staffing revenues declined by 9% to $20 million [21] - PEO worksite employees grew by 5.2% in Q4, driven by a record number of new client additions [21][22] - Staffing business declined by 9% year-over-year, but the rate of decline has slowed significantly compared to the previous year [11] Market Data and Key Metrics Changes - Q4 gross billings growth by region showed East Coast growth at 21%, Southern California at 11%, Mountain region at 10%, Northern California at 5%, and Pacific Northwest declining by 4% [22] - The Pacific Northwest region, while the smallest, is expected to return to growth in 2025 after stabilizing trends [22] Company Strategy and Development Direction - The company is focusing on an asset-light model and expanding into new geographies, with a record number of worksite employees added from new clients [5][6] - Continued investment in technology and product development, including the launch of new products like the BBSI Applicant Tracking System, is aimed at enhancing client support and operational efficiency [15][50] - The company aims to enhance its value proposition by integrating technology into its service offerings, particularly for white-collar clients [46][66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued hiring trends in 2025, despite client growth remaining below historical averages [10][18] - The company anticipates gross billings and average WSEs to strengthen in 2025, with expected growth rates between 7% and 9% [29] - Management noted that while wage rates are increasing, they are seeing stability in client hiring metrics, which is a positive indicator for future growth [34][35] Other Important Information - The company achieved a Net Promoter Score increase of five points to 69, indicating strong client satisfaction [6][7] - The company has a strong balance sheet with $122 million in unrestricted cash and no debt, allowing for continued investments and shareholder returns [27][28] Q&A Session Summary Question: What are clients saying about growth in the current environment? - Management noted stability and recovery in metrics, with consistent wage inflation and improved hiring trends observed in Q3 and Q4 [34][35] Question: Is the majority of average WSE growth coming from new clients? - Yes, the majority of growth is attributed to controllable growth from new client additions and retention [36] Question: Can you discuss the mechanics of healthcare revenue? - The company earns through reseller fees and administrative fees, providing value through compliance and IT services [39][40] Question: Are there any signs of a turnaround in the workers' compensation pricing market? - Management indicated a deceleration in rate decreases but no clear bottom has been identified yet [56][57] Question: What is the exposure to businesses affected by California wildfires? - Minimal impact was reported on employees and branches, with expectations of future business opportunities arising from rebuilding efforts [58][60]

Financial Data and Key Metrics Changes - The company reported adjusted EPS of $0.05 per share and adjusted EBITDA of $23 million for Q4 2024, exceeding the midpoint of expectations [5] - The average number of paid worksite employees was 309,093, a decrease of 2% from Q4 2023, reflecting weak client hiring [5][6] - Total gross profit declined by 2% from Q4 2023 due to the decrease in paid worksite employees, while gross profit per worksite employee was $235 per month, slightly above expectations [5][6] - For the full year 2024, adjusted EBITDA was $270 million and adjusted EPS was $3.58, both above initial guidance [9] Business Line Data and Key Metrics Changes - The company experienced a 37% increase in worksite employees paid from new clients compared to Q4 2023, indicating strong performance in client acquisition [5] - Client retention averaged 99% for the quarter, demonstrating effective retention strategies [5] - Operating expenses increased by 17% over Q4 2023, primarily due to investments in the Workday strategic partnership [6][9] Market Data and Key Metrics Changes - The small to mid-sized business client base experienced nearly flat net growth in worksite employees for 2024, the lowest level in two decades excluding recession years [14] - The National Federation of Independent Business January Small Business Optimism Index reached its highest level in six years, indicating improved sentiment among small business owners [16] Company Strategy and Development Direction - The company aims to regain growth momentum through a successful fall sales and client retention campaign, with a focus on key initiatives for 2025 [11][17] - The strategic partnership with Workday is expected to enhance long-term growth and profitability, with significant milestones anticipated in 2025 [21][29] - The company is implementing a role-based approach to optimize its sales organization and improve service efficiency across its HR solutions [18][19] Management's Comments on Operating Environment and Future Outlook - Management noted a shift in small and mid-sized business decision-makers' mindsets post-election, leading to increased optimism and hiring expectations for 2025 [15][16] - The company conservatively forecasts net client hiring to improve in 2025 but remains below historical levels, with expected worksite employee growth of 2% to 4% over 2024 [31][32] - Management emphasized the importance of aligning sales, service, and pricing teams to drive results in 2025 [30] Other Important Information - The company plans to spend approximately $62 million on the Workday strategic partnership in 2025, up from $57 million in 2024 [34] - The expected benefits cost trend for 2025 is forecasted to be between 5% to 6.5%, compared to 4.3% in 2024 [32][33] Q&A Session Summary Question: Can you talk about the sales leads from the Workday partnership and their impact on client retention? - Management indicated significant progress in the go-to-market strategy and expects improved lead flow and client retention as the joint solution is developed [40][42] Question: How will the operating expenses related to Workday be structured throughout the year? - Operating expenses are expected to be relatively steady throughout the year, with a small drop-off after completing the corporate component [43] Question: What is the outlook for net hiring in 2025? - Management anticipates a gradual improvement in net hiring, weighted towards the second half of the year, with expectations of a return to mid-single-digit growth rates [60][61] Question: How is the competitive pricing environment affecting new sales and retention? - Management noted that while the competitive environment is significant, they have maintained strong pricing and developed unique incentives to attract clients without compromising long-term pricing strategies [66][68] Question: Can you elaborate on the sales optimization strategy and its expected benefits? - The sales optimization strategy focuses on streamlining sales efforts across different HR solutions, which is expected to enhance accountability and improve sales efficiency [54][55]