Summary of Insperity (NSP) Q1 2026 Earnings Call

1Key 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.

2Strategic 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.

3Forward 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.

4Bad 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.

5Notable 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.