Barrett Business Services 2025 Q1 Earnings Net Loss Widens by 650%

Barrett Business Services (BBSI) reported its fiscal 2025 Q1 earnings on May 8th, 2025. Barrett Business Services reported a 10% revenue growth, reaching $292.6 million in Q1 2025, but missed expectations with a wider net loss. The company maintained its guidance, expecting gross billings growth of 7% to 9% for 2025. BBSI projects a gross margin as a percentage of gross billings between 2.85% and 3.10%, and an effective annual tax rate to remain at 26% to 27%. The company remains optimistic about its growth prospects despite a challenging market environment.

Revenue

The total revenue of Barrett Business Services saw a notable increase of 10.1% in the first quarter of 2025, reaching $292.57 million, compared to $265.78 million in the same period of 2024. This growth reflects the company's successful expansion in its business operations.

Earnings/Net Income

Barrett Business Services experienced a deepening of its losses, with the company reporting a loss of $0.04 per share in Q1 2025 compared to a loss of $0.01 per share in Q1 2024. Furthermore, the company's net loss widened significantly to $1.02 million from a net loss of $136,000 in the previous year. The earnings per share performance was disappointing, highlighting challenges in profitability despite revenue growth.

Price Action

The stock price of Barrett Business Services dropped 3.07% during the latest trading day, edged down 0.88% over the most recent full trading week, and climbed 3.01% month-to-date.

Post-Earnings Price Action Review

Over the past five years, buying Barrett Business Services (BBSI) shares following a quarter-over-quarter revenue increase and holding for 30 days has yielded impressive returns. This strategy delivered a remarkable 316.95% return, significantly outperforming the benchmark by 224.39%. Despite experiencing a maximum drawdown of -27.72%, the approach demonstrated moderate risk and returns, as reflected in its Sharpe ratio of 1.12. The strategy's compound annual growth rate (CAGR) of 33.20% and 92.56% benchmark return indicate its profitability, particularly in the context of volatile market conditions. These results underscore the potential benefits of this tactic, although investors should remain mindful of inherent risks.

CEO Commentary

"BBSI delivered a strong start to the year, highlighted by record gross and net WSE additions and continued high client retention," said Gary Kramer, President and CEO of BBSI. He noted that the January 1st benefits selling season was the strongest ever and emphasized the favorable trends continuing amidst a complex demand environment due to macroeconomic uncertainty. Kramer expressed confidence in BBSI's ability to navigate these dynamics, attributing the company's sustainable growth and long-term value to consistent execution, a differentiated service model, and strong client relationships.

Guidance

BBSI expects gross billings growth of 7% to 9% for 2025, with an anticipated increase in the average number of WSEs of 4% to 6%. The company projects a gross margin as a percentage of gross billings between 2.85% and 3.10%, and an effective annual tax rate to remain at 26% to 27%.

Additional News

Barrett Business Services continued its stock repurchase program, spending $9.1 million in the first quarter of 2025, amounting to 228,376 shares repurchased. The company also declared a quarterly dividend of $0.08 per share, payable on June 6, 2025, to stockholders of record as of May 23, 2025. Furthermore, BBSI insiders have been active in trading, with notable sales by Thomas J. Carley and Thomas B. Cusick and a purchase by Joseph Stephen Clabby. The company remains committed to returning value to shareholders through both stock buybacks and dividends, amidst ongoing market challenges.

Ask Aime: "Has BBSI's stock rebounded after Q1 earnings?"