Insperity (NSP) Q2 2024 earnings summary

Executive summary

• Q2 2024 adjusted EPS rose 34% to $0.86 and adjusted EBITDA increased 29% to $66M, both exceeding guidance, driven by lower benefit costs, strong pricing, and lower operating expenses.

• Q2 net income surged 50% to $18M, while diluted EPS increased 45% to $0.48; average paid worksite employees declined 1% year-over-year to 306,958 due to weak net hiring.

• Client retention remained robust at 99% in Q2 2024, despite economic headwinds and lower net hiring in the client base.

• $81M was returned to shareholders in H1 2024 through dividends and share repurchases.

• Long-term outlook remains positive, supported by the Workday strategic partnership.

Financial highlights

• Q2 2024 revenues increased 1% year-over-year to $1.61B; gross profit rose 16% to $260M, offsetting a 1% decline in paid worksite employees through strong pricing and lower benefit costs.

• Q2 operating expenses rose 13% year-over-year, including $14M for the Workday partnership; year-to-date, $19M has been invested in this initiative.

• Q2 operating income increased 44% to $23M; Q2 adjusted net income was $33M, up 32%.

• Adjusted cash at June 30, 2024 was $211M, up from $171M at December 31, 2023, with $280M available under the $650M credit facility.

• Effective tax rate for Q2 was 28%, up from 25% in Q2 2023.

Outlook and guidance

• Full-year 2024 adjusted EPS guidance is $3.33–$3.88 (midpoint up from $3.17–$3.90); adjusted EBITDA forecasted at $261–$290M.

• Average paid worksite employees for 2024 now expected to decline 0.5%–1.5% year-over-year to 307,400–310,600.

• Q3 2024 adjusted EBITDA expected at $32–$45M and adjusted EPS at $0.21–$0.45; paid worksite employees forecasted down 1.5%–2.5% year-over-year.

• Management expects liquidity needs to be met for the remainder of 2024.

• No material changes in risk factors or forward-looking statements since the last annual report.