Barrett Business Services (BBSI) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue increased 5% year-over-year to $307.0 million, with gross billings up 3.5% to $2.16 billion, driven by professional employer services growth and strong client additions, despite a 21% decline in staffing services revenue and macroeconomic headwinds.

• Net loss was $14.8 million, or $(0.59) per diluted share, compared to a net loss of $1.0 million in Q1 2025, primarily due to a one-time $11.6 million tax charge related to disallowed wage-based tax credits.

• Excluding the non-recurring tax charge, net loss was $3.2 million, or $(0.13) per diluted share.

• Average worksite employees grew 1.9% year-over-year to 134,993, with client base growth partially offset by client hiring headwinds.

• Stable margins and improved pricing supported results, with continued product expansion and new tech launches enhancing client retention.

Financial highlights

• Gross margin was $43.2 million (14.1% of revenue), up slightly from $42.6 million in Q1 2025, with gross margin rate aligned with expectations.

• PEO gross billings rose 3.7% to $2.15 billion, while staffing revenues fell 21% to $14 million.

• SG&A expenses increased by 6% to $47.5 million, mainly due to higher employee-related costs.

• Unrestricted cash and investments totaled $91.9 million at quarter end, with no debt outstanding.

• Benefit costs rose to $27.4 million from $17.6 million year-over-year, consistent with benefits billings growth.

Outlook and guidance

• Full-year 2026 guidance reaffirmed: gross billings growth of 3–5%, average worksite employee growth of 2–4%, gross margin as a percentage of gross billings between 2.7% and 2.85%, and normalized effective tax rate of 26–27%.

• Management excluded the $11.6 million tax charge from non-GAAP measures, emphasizing it is not indicative of ongoing performance.

• Expectation for client growth to remain below historical norms, with moderation in low client hiring impact in the second half of the year.

• The company expects continued quarterly fluctuations due to seasonality, payroll tax limits, and claims experience.