Insperity Earnings Call: Mixed Results Amid Challenges

Insperity ((NSP)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Insperity painted a mixed picture, with notable achievements being overshadowed by financial challenges. The company celebrated strong client retention, the rollout of HRScale, and strategic partnerships. However, these positives were tempered by unexpected health benefits costs and an earnings shortfall, contributing to a generally negative outlook.

Strong Client Retention

Insperity reported a robust client retention rate, maintaining an impressive 99% per month, consistent with the previous year’s performance. This stability in client retention is a testament to the company’s ability to maintain strong relationships and deliver value to its clients.

HRScale Rollout and Strategic Partnership with Workday

The official launch of HRScale is a significant milestone for Insperity, targeting mid-market companies. The strategic partnership with Workday is anticipated to be a key growth driver, potentially opening new avenues for expansion and innovation.

Operating Expense Management

The company successfully managed its operating expenses, achieving a 4% year-over-year decrease in Q3 2025. This was primarily due to reductions in salaries and general and administrative costs, reflecting Insperity’s commitment to cost efficiency.

New UnitedHealthcare Agreement

Insperity has entered into a new agreement with UnitedHealthcare, which is expected to significantly reduce claim costs and provide long-term benefits. This move is seen as a strategic effort to mitigate rising healthcare costs and improve financial performance.

Record Sales Performance

The company achieved record sales performance in Q3, with HR360 sales increasing by 45% compared to the same period last year. This growth was driven by strong performance in both the mid-market and enterprise sectors.

Higher-than-Expected Health Benefits Costs

Q3 claims data revealed a higher-than-expected increase in outpatient and inpatient utilization and pharmacy costs, resulting in a 9.1% benefits cost trend for Q3 2025 over Q3 2024. This unexpected rise in costs has put pressure on the company’s financials.

Earnings Shortfall

Insperity reported an adjusted EPS of minus $0.20 and an adjusted EBITDA of $10 million for the quarter, falling below forecasted ranges. The shortfall was primarily due to the higher-than-expected benefits costs.

Challenging Hiring Environment

The hiring environment remains challenging, with Q3 2025 activity slightly weaker than Q3 2024. This ongoing difficulty in hiring is contributing to the company’s cautious outlook.

Negative Adjusted EPS Forecast for Q4

The company is forecasting a negative adjusted EPS for Q4, ranging from minus $0.79 to minus $0.16, indicating continued financial strain. This forecast reflects the ongoing challenges Insperity faces in managing costs and navigating a tough economic environment.

Forward-Looking Guidance

Despite the hurdles, Insperity’s CFO, Jim Allison, provided updated guidance for Q4 and the full year 2025. The company expects a slight increase in average paid worksite employees and forecasts full-year adjusted EPS between $0.84 and $1.47. While elevated benefits costs are projected to persist, Insperity plans to counter these with strategic pricing adjustments and the new UnitedHealthcare agreement. Operating expenses for the full year 2025 are expected to be approximately 3% lower than 2024 levels.

In conclusion, Insperity’s earnings call highlighted a mix of achievements and challenges. While the company is making strides in client retention and strategic partnerships, financial pressures from rising healthcare costs and a challenging hiring environment are significant hurdles. The forward guidance suggests cautious optimism, with strategic measures in place to address ongoing challenges.