Insperity (NSP) Q4 2024 earnings summary

Executive summary

• Q4 2024 delivered solid results with Adjusted EPS of $0.05 and Adjusted EBITDA of $23M, both above the midpoint of guidance, despite a 2% year-over-year decline in paid worksite employees due to weak client hiring; full-year net income was $91M and Adjusted EBITDA $270M.

• Record-setting fall sales campaign drove an 8% increase in booked sales and a 37% rise in worksite employees from new clients versus Q4 2023, with client retention averaging 99%.

• Achieved a key inflection point with year-over-year growth turning positive in January 2025, following strong client retention and a rebound in new sales.

• Strategic partnership with Workday advanced, with $57M in 2024 operating expenses and key milestones set for 2025, expected to drive long-term growth and profitability.

• $152M returned to shareholders in 2024 via $63M in share repurchases and $89M in dividends.

Financial highlights

• Q4 2024 average paid worksite employees declined 2% year-over-year to 309,093; full-year average was 307,261, with net hiring by clients nearly flat, the lowest in 20 years outside a recession.

• Q4 gross profit per worksite employee was $235/month, flat year-over-year; full-year gross profit per worksite employee was $285/month, up 3% from 2023.

• Q4 gross profit decreased 2% to $218M; Q4 operating expenses rose 17% year-over-year, including $19M for Workday partnership.

• Full-year operating expenses increased 14%, reflecting investments in sales, service, technology, and inflation impacts.

• Adjusted cash at year-end was $134M, with $280M available under a $650M credit facility.

Outlook and guidance

• Q1 2025 average paid worksite employees expected at 306,500–309,000, up 0.9%–1.7% year-over-year; full-year 2025 guidance is 313,400–319,500, up 0.9%–4.0%.

• 2025 Adjusted EBITDA guidance: $240M–$285M; Adjusted EPS: $3.10–$3.95, up to 10% year-over-year growth.

• Q1 2025 Adjusted EPS guidance is $1.89–$2.15; Adjusted EBITDA: $121M–$135M.

• Benefits cost trend expected at 5%–6.5% in 2025, up from 4.3% in 2024; operating expenses planned flat year-over-year, with $62M planned 2025 spend on Workday partnership.

• Net client hiring expected to improve as 2025 progresses, supported by improved small business sentiment.