Barrett Business Services (BBSI) Q3 2024 earnings summary

Executive summary

• Q3 2024 net income rose to $19.6 million, or $0.74 per diluted share, up from $18.2 million and $0.67 per share year-over-year.

• Revenues increased 8% to $294.3 million, with gross billings up 9% to $2.14 billion, driven by PEO services and new client growth.

• Average worksite employees (WSEs) rose 5% year-over-year, reflecting strong client retention and new business.

• Client retention remained high, above 90%, with most client losses due to business closures or M&A.

• Continued expansion into new markets and successful launch of BBSI Benefits health insurance offering.

Financial highlights

• Gross billings rose 9% year-over-year to $2.14 billion in Q3 2024; revenue increased 7.7% to $294.3 million.

• Gross margin for Q3 2024 was $74.4 million (25.3% of revenue) and 3.5% of gross billings, consistent with prior year.

• Net income per diluted share increased to $0.74 from $0.67 in the prior year quarter.

• SG&A expenses increased due to higher variable compensation and employee-related costs.

• Unrestricted cash and investments totaled $94.4 million at quarter end, with no debt.

Outlook and guidance

• Full-year 2024 gross billings growth expected between 7% and 8%, up from prior 6%-8% range.

• WSEs projected to increase 4%-5% for the year.

• Gross margin as a percent of gross billings expected between 3.03% and 3.07%.

• 2025 gross billings growth anticipated to be similar to 2024, barring economic dislocation.

• Management expects continued quarterly fluctuations due to seasonality, claims experience, and demand variability.