Insperity (NSP) Q1 2025 earnings summary

Executive summary

• Q1 2025 adjusted EPS was $1.57 and adjusted EBITDA was $102 million, both down 31% and 28% year-over-year, respectively, due to higher healthcare costs and macroeconomic uncertainty.

• Net income and diluted EPS both decreased 35% year-over-year to $51 million and $1.35, respectively.

• Paid worksite employees grew 1% year-over-year to 306,023, with new client sales up 3%, but overall growth was below expectations due to client indecision and economic headwinds.

• Client retention improved to 91% (9% attrition) versus 88% (12% attrition) in Q1 2024, and sales activity saw double-digit increases in leads and opportunities.

• The Workday strategic partnership achieved a major milestone with the successful launch of the corporate platform, a finalized go-to-market plan, and increased investment, aiming to drive future mid-market growth.

Financial highlights

• Revenues rose 3% year-over-year to $1.86 billion, but gross profit per worksite employee fell to $338/month from $378/month in Q1 2024 due to an 8.4% increase in benefits costs per covered employee.

• Operating expenses rose 2% year-over-year, mainly due to $13 million invested in the Workday partnership.

• Adjusted EBITDA margin declined to 5.5% from 7.9% year-over-year; gross margin compressed to 16.6% from 19.1%.

• $42 million was returned to shareholders in Q1 2025 via $23 million in dividends and $19 million in share repurchases.

• Adjusted cash at quarter-end was $124 million, with $280 million available under the $650 million credit facility.

Outlook and guidance

• 2025 worksite employee growth forecast reduced to 0.5%-3% year-over-year, with sequential quarterly growth of 1%-2%.

• Full-year benefits cost per covered employee now expected to rise 6.5%-7.5%, up from 5%-6.5% previously.

• Full-year adjusted EBITDA forecasted at $190M-$245M and adjusted EPS at $2.23-$3.28, both down year-over-year.

• Q2 2025 guidance: 308,000-311,000 paid worksite employees (+0.3%-1.3% YoY), adjusted EBITDA $33M-$53M, adjusted EPS $0.29-$0.67.

• Operating expenses expected to decline sequentially through the year and be lower than 2024, with $62M investment in Workday partnership.