Summary of Insperity Q2 2026 Earnings Call

1Key Financial Results and Metrics

Adjusted EPS: $1.31, down 17% from $1.57 in Q1 2025.

Adjusted EBITDA: $103 million, a 1% increase from $102 million in Q1 2025.

Total Gross Profit: $302 million, a 3% decrease year-over-year, but a significant improvement from a 21% decline in Q4 2025.

Average Paid Worksite Employees: 303,049, a 1% decrease compared to Q1 2025.

Operating Expenses: Decreased by 1% to $240 million, including a $9 million restructuring charge.

Dividends Paid: $23 million, with $4 million spent on share repurchases.

Cash Position: $36 million in adjusted cash, down due to seasonal working capital fluctuations.

2Strategic Updates and Business Highlights

Margin Recovery Plan: Progress noted, with improvements in gross profit per worksite employee driven by lower benefit costs and a favorable client mix.

HRScale Rollout: Initial beta clients onboarded, with nearly 6,000 worksite employees expected to be added within six months. This initiative aims to enhance client retention and attract larger accounts.

AI Initiatives: Emphasis on leveraging AI to improve HR services and operational efficiency, with ongoing development of AI tools for client engagement and support.

3Forward Guidance and Outlook

Full Year 2026 Adjusted EBITDA Guidance: Maintained at $170 million to $230 million.

Worksite Employee Growth Forecast: Revised to a range of 303,000 to 307,000, indicating a decline of 1% to 2.3% from 2025.

Q2 2026 Expectations: Average paid worksite employees projected between 302,500 and 304,500, with adjusted EBITDA expected to range from $18 million to $46 million.

4Bad News, Challenges, or Points of Concern

Client Attrition: Increased to 11%, within historical ranges, but higher than desired, impacting overall profitability.

Economic Sentiment: Small and medium-sized businesses are showing increased caution due to macroeconomic challenges, affecting sales and retention.

Declining Sales: Booked sales fell below internal targets, particularly in HR360 and HRCore segments, attributed to the focus on margin recovery.

Higher Effective Tax Rate: Increased to 41% for Q1 2026, negatively impacting adjusted EPS.

5Notable Q&A Insights

Sales Productivity: Adjustments in sales processes are expected to improve results moving forward, particularly with the HRScale initiative.

Competitive Environment: Increased pressure on pricing due to market conditions, but Insperity maintains a competitive edge through differentiated offerings.

Client Sentiment: Survey results indicate a decline in optimism among clients regarding economic conditions, which may affect future growth.

Implementation Costs: Expected to decline in the second half of 2026 as HRScale ramps up, with a transition of resources from investment to service provision. Overall, Insperity's Q2 2026 results reflect a mixed performance with progress in margin recovery and strategic initiatives, but challenges remain in client retention and economic sentiment affecting growth prospects.