Barrett Business Services ((BBSI)) has held its Q1 earnings call. Read on for the main highlights of the call.
Barrett Business Services Inc. (BBSI) recently held its earnings call, revealing a strong start to the year with record revenue growth and successful product launches. The sentiment was generally positive, with notable achievements in client additions and product upselling. However, challenges such as staffing operations, macroeconomic uncertainties, and slower client hiring tempered the optimism, leading to a cautious outlook for the remainder of the year.
Record Start to 2025
BBSI kicked off 2025 with a record-breaking performance, driven by new client sales, upselling of products, and exceptional client retention. These efforts resulted in revenue exceeding expectations, setting a promising tone for the year.
Growth in Worksite Employees (WSEs)
The company reported a remarkable 7.6% year-over-year growth in worksite employees, largely fueled by a 55% increase in new client WSEs compared to the previous year. This growth underscores BBSI’s successful client acquisition strategies.
Strong Billings and Regional Performance
BBSI’s gross billings surged by 9.5% to $2.09 billion in the first quarter of 2025. The East Coast and Southern California regions demonstrated impressive growth, with increases of 14% and 11%, respectively.
Successful Launch of BBSI Benefits
The introduction of BBSI Benefits, a new health insurance offering, has been well-received, attracting approximately 640 clients and over 17,500 participants. This initiative is expected to positively impact earnings in 2025.
Positive Feedback on IT Investments
The rollout of the BBSI Applicant Tracking System has garnered positive feedback, enhancing client efficiencies and reinforcing the company’s commitment to technological advancements.
Decline in Staffing Operations
Despite the strong start, BBSI experienced a 10% decline in its staffing business compared to the previous year, with a notable slowdown in March that fell below expectations.
Macroeconomic Uncertainty Impact
Trade negotiations and broader economic uncertainties have prompted BBSI to adopt a cautious outlook for the rest of 2025, despite their initial strong performance.
Lower than Expected Hiring by Clients
Client hiring slowed in March, falling below historical levels and impacting anticipated workforce growth, which poses a challenge for BBSI moving forward.
Net Loss in Q1
BBSI reported a net loss per diluted share of $0.04 in the first quarter, compared to a net loss of $0.01 per diluted share in the previous year. This was attributed to seasonality and payroll tax expenses.
Forward-Looking Guidance
Looking ahead, BBSI maintains a gross billings growth outlook of 7% to 9% for the year, despite economic uncertainties. The company plans to expand its asset-light market model, adding over 600 new worksite employees and opening new locations in Chicago, Dallas, and Nashville by the third quarter.
In summary, Barrett Business Services Inc. showcased a strong start to 2025 with record revenue growth and successful product launches. While challenges such as staffing declines and macroeconomic uncertainties present hurdles, the company’s strategic initiatives and forward-looking plans provide a cautiously optimistic outlook for the year.