Barrett Business Services (BBSI) Q1 2025 earnings summary

Executive summary

• Revenue for Q1 2025 increased 10.1% year-over-year to $292.6 million, driven by 11.7% growth in PEO services and a 7.6% rise in average worksite employees, with record client growth and retention.

• Gross billings reached $2.09 billion, up 9.5% year-over-year, with PEO gross billings up 10% and staffing revenues down 10%.

• Net loss for Q1 2025 was $1.0 million, or $(0.04) per diluted share, compared to a net loss of $0.1 million, or $(0.01) per diluted share, in Q1 2024, reflecting typical Q1 seasonality.

• January 1st benefits selling season was the strongest ever, with BBSI Benefits reaching 640 clients and over 17,500 participants by April.

• Continued expansion into new markets using an asset-light model, with plans to open new locations in Chicago, Dallas, and Nashville by early Q3.

Financial highlights

• Gross margin was $42.6 million (14.6% of revenue), slightly down from 14.9% in Q1 2024, impacted by higher payroll taxes and benefit costs.

• Average billing per WSE rose 2.6% year-over-year, with regional PEO gross billings growth led by East Coast (+14%) and Southern California (+11%).

• SG&A expense increased 6% to $44.8 million, mainly due to higher employee-related costs and profit share incentives.

• Investment income was $2.6 million, down $600,000 year-over-year due to lower average interest rates.

• Net cash provided by operating activities was $5.2 million, with $32.0 million used in investing and $12.8 million used in financing activities.

Outlook and guidance

• Maintained full-year outlook due to macroeconomic uncertainty, despite Q1 results exceeding plan.

• 2025 guidance: gross billings growth of 7–9%, WSE growth of 4–6%, gross margin as a percent of billings between 2.85% and 3.1%, and effective annual tax rate of 26–27%.

• Management expects continued quarterly fluctuations due to seasonality, payroll tax limits, and workers' compensation claims.