Insperity ((NSP)) has held its Q1 earnings call. Read on for the main highlights of the call.
Insperity’s recent earnings call reflected a mixed sentiment, with notable achievements in client retention and strategic partnerships, yet financial performance was hampered by unforeseen benefits costs and macroeconomic uncertainties. This led to a downward revision in the company’s financial guidance.
Client Retention Success
Insperity reported a significant achievement in client retention, reaching 91% in Q1 2025, up from 88% in the same period last year. This improvement underscores the effectiveness of the company’s client satisfaction and retention strategies.
Workday Strategic Partnership Progress
The company made substantial progress in its partnership with Workday, successfully launching the corporate Workday platform. Additionally, Insperity developed a go-to-market plan aimed at mid-market businesses, signaling a strategic push to expand its market reach.
Positive Growth in Paid Worksite Employees
Insperity experienced a 0.7% increase in the average number of paid worksite employees, totaling 306,023 in Q1 2025. This growth indicates a positive momentum in the company’s workforce solutions segment.
Dividend and Share Repurchase
The company returned capital to shareholders by distributing $23 million in cash dividends and repurchasing 224,000 shares at a cost of $19 million in the first quarter, reflecting a commitment to shareholder value.
Higher-than-Expected Benefits Costs
Insperity’s financial performance was impacted by benefits costs exceeding budget by $28 million due to increased medical claims, resulting in an adjusted EPS of $1.57 and adjusted EBITDA of $102 million, both below expectations.
Impact of Macroeconomic Uncertainty
Economic policy uncertainties led to delayed or canceled client starts, with 66% of clients anticipating negative economic impacts, a significant increase from 29% in January.
Reduced Financial Guidance
Insperity lowered its full-year financial guidance, now expecting adjusted EBITDA between $190 million and $245 million and adjusted EPS from $2.23 to $3.28, due to increased benefits costs and economic uncertainty.
Forward-Looking Guidance
Looking ahead, Insperity provided guidance for Q2 and the full year 2025. The company anticipates an increase in average paid worksite employees to between 308,000 and 311,000 in Q2. Adjusted EBITDA is forecasted to range from $33 million to $53 million, with adjusted EPS between $0.29 and $0.67. For the full year, worksite employee growth is projected at 0.5% to 3%, with benefits cost per covered employee expected to rise by 6.5% to 7.5%.
In conclusion, Insperity’s earnings call highlighted both achievements and challenges. While client retention and strategic partnerships are strong, financial performance was hindered by higher benefits costs and economic uncertainties. The company’s revised guidance reflects these challenges, yet it remains focused on growth and shareholder value.