NSP — Insperity, Inc.

Summary of Insperity (NSP) Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Adjusted EPS: $1.31, a 17% decrease from $1.57 in Q1 2025.
• Adjusted EBITDA: $103 million, slightly up from $102 million in Q1 2025.
• Total Gross Profit: $302 million, down 3% year-over-year but improved from a 21% decline in Q4 2025.
• Average Paid Worksite Employees: 303,049, a 1% decrease from Q1 2025.
• Client Attrition: 11%, within historical range of 9% to 12%.
• Operating Expenses: $240 million, down 1% year-over-year, with a restructuring charge of $9 million.
• Dividends Paid: $23 million, and $4 million spent on share repurchases.

2. Strategic Updates and Business Highlights

• Margin Recovery Plan: Progress noted with improved gross profit per worksite employee driven by lower-than-expected benefit costs and strategic pricing.
• HRScale Rollout: Initial beta clients onboarded, with nearly 6,000 worksite employees expected to be added in the next 6 months. This initiative aims to enhance client retention and attract larger accounts.
• AI Initiatives: Focus on leveraging AI to improve HR services and operational efficiency, with ongoing development of AI tools to support clients and streamline processes.

3. Forward Guidance and Outlook

• 2026 Adjusted EBITDA Guidance: Expected to range between $170 million to $230 million.
• Worksite Employee Growth Forecast: Adjusted to 303,000 to 307,000 for the year, reflecting a decrease of 1% to 2.3% from 2025.
• Q2 2026 Expectations: Average paid worksite employees projected between 302,500 to 304,500, with adjusted EBITDA guidance of $18 million to $46 million.

4. Bad News, Challenges, or Points of Concern

• Client Sales and Retention: Lower-than-expected sales and higher attrition rates due to macroeconomic challenges affecting small and medium-sized businesses (SMBs).
• Economic Sentiment: A notable decline in optimism among SMBs, with increased concerns about economic challenges impacting hiring and compensation.
• Competitive Pressures: Increased competition and pricing pressures in the market, although Insperity believes its new HRScale offering provides a competitive edge.

5. Notable Q&A Insights

• Sales Productivity: Adjustments in sales processes are expected to improve results moving forward, particularly for HR360 and HRScale.
• Impact of Economic Sentiment: The company is adjusting its go-to-market strategies in response to declining SMB confidence, focusing on providing value to retain clients.
• Cost Management: Anticipated reduction in implementation costs for HRScale as the company stabilizes operations and transitions resources to service delivery.
• Healthcare Costs: Benefit costs increased by 5% year-over-year, attributed to client mix changes and plan design adjustments, with expectations for this trend to hold steady.

Overall, Insperity's Q1 2026 results reflect a challenging environment with strategic initiatives aimed at margin recovery and growth, despite headwinds from economic sentiment and competitive pressures.