Insperity 2025 Q1 Earnings Misses Targets as Net Income Declines 35.4%

Insperity (NSP) reported its fiscal 2025 Q1 earnings on Apr 29th, 2025. The company missed Wall Street’s expectations, reporting a 35.4% decline in net income to $51 million, compared to $79 million in the same quarter last year. Insperity's guidance for the full year was adjusted downward, indicating anticipated declines in both adjusted EPS and EBITDA. The company remains committed to addressing elevated healthcare costs to improve profitability and is optimistic about its strategic partnership with Workday driving future growth.

Revenue

Insperity's total revenue increased by 3.4%, reaching $1.86 billion in 2025 Q1, compared to $1.80 billion in 2024 Q1.

Earnings/Net Income

Insperity's EPS declined 35.1% to $1.37 in 2025 Q1 from $2.11 in 2024 Q1, with net income falling to $51 million, down 35.4% from $79 million. The decrease in EPS reflects challenges in maintaining profitability due to higher healthcare costs.

Price Action

Post-Earnings Price Action Review

The impact of Insperity’s earnings report on its stock price has shown varied results across different time frames. Revenue growth initially prompted a short-term positive reaction, evidenced by a 3-day win rate of 52.38%. However, this effect generally diminished over longer periods, likely due to market concerns regarding sustainability and valuation. Similarly, while net income beats led to a short-term positive stock reaction, with a 10-day win rate of 47.62%, the 30-day win rate rose to 57.14%, indicating potential weakening of positive momentum. In contrast, the impact of diluted EPS on stock price was more lasting, as it had a 30-day win rate of 57.14%, suggesting that the market places greater emphasis on earnings quality. Overall, while short-term stock price appreciation is achieved via revenue and net income growth, diluted EPS tends to have a more sustained positive effect on Insperity’s stock price due to its implications for profitability and sustainability.

CEO Commentary

"Our first quarter financial results, reflecting macro-economic turbulence and healthcare cost volatility, are in stark contrast with the solid execution of our game plan for building the foundation for future growth acceleration," said Paul J. Sarvadi, Insperity Chairman and Chief Executive Officer. He highlighted progress on strategic partnership milestones with Workday, emphasizing an agreed-upon go-to-market plan expected to drive future growth. Sarvadi acknowledged a decrease in gross profit due to higher-than-expected healthcare costs but expressed confidence in the company's operational management and plans to address elevated healthcare expenses to improve profitability.

Guidance

The company provided updated guidance for 2025, projecting average WSEEs paid to be between 308,000 and 311,000 in Q2 2025, and between 308,800 and 316,400 for the full year. Adjusted EPS is expected to range from $0.29 to $0.67 for Q2, and $2.23 to $3.28 for the full year, reflecting year-over-year decreases. Adjusted EBITDA for Q2 is anticipated to be between $33 million and $53 million, with the full year guidance set between $190 million and $245 million, indicating significant expected declines from the previous year.

Additional News

Within the past three weeks, Insperity has been active in its strategic endeavors. The company announced the initiation of a strategic partnership with Workday, aimed at enhancing service offerings and driving future growth. Additionally, Insperity continues to return capital to shareholders, having paid $23 million in dividends and repurchased 224,000 shares for $19 million during Q1 2025. Client retention also improved significantly, with a retention rate of 91% in Q1 2025 compared to 88% in Q1 2024, reflecting strong customer loyalty amid challenging economic conditions.