Insperity's Q2 2025 Earnings: Revenue Growth, Margins Under Pressure

Insperity, a human resources and business performance solutions provider, reported Q2 2025 revenue of $1.7 billion, exceeding projections and up 3% YoY. However, non-GAAP EPS dropped to $0.26, missing estimates, and adjusted EBITDA fell 52%. The company experienced heavy margin pressure from rising healthcare costs, resulting in a net loss and a decline in key profitability metrics. Management is implementing new pricing and benefit plan designs to offset cost inflation.

Insperity, a leading provider of human resources (HR) and business performance solutions, reported its second quarter (Q2) 2025 results on August 1, 2025. The company's revenue (GAAP) reached $1.7 billion, exceeding analyst projections and up 3% year-over-year (YoY). However, non-GAAP earnings per share (EPS) dropped to $0.26, missing estimates by 36.6%, and adjusted EBITDA fell 52%. The quarter was marked by heavy margin pressure from rising healthcare costs, resulting in a net loss (GAAP) and a decline in key profitability metrics [1].

Key financial highlights for Q2 2025 include:
- Revenue (GAAP): $1.7 billion, up 3% YoY
- Non-GAAP EPS: $0.26, down 70% YoY
- Adjusted EBITDA: $32 million, down 52% YoY
- Gross profit (GAAP): $223 million, down 14% YoY
- Net loss (GAAP): $5 million

Insperity's average number of paid worksite employees (WSEEs) increased 1% to 309,115, with revenue per WSEE also up 3% YoY due to higher pricing and increased WSEEs [2]. Despite the revenue growth, the company faced significant margin pressure from elevated healthcare costs, driven by continued elevated pharmacy trends and frequency of large claim activity. This resulted in a net loss of $5 million for the quarter.

Management is implementing new pricing and benefit plan designs to offset cost inflation. Insperity has committed $14 million in Q2 2025 and $27 million in the first six months of 2025 to its partnership with Workday, with the new joint product, Insperity HRScale, expected to begin beta client trials early next year. The company also maintained cost discipline overall, with operating expenses declining 3% despite continued investment in product development and technology [1].

Looking ahead, Insperity expects full-year adjusted EPS in the range of $1.81 to $2.51 for 2025, a reduction of 30% to 49% versus last year. Adjusted EBITDA is expected to range from $170 million to $205 million, down between 24% and 37%. The company continues to emphasize cost control while investing for the long term, aiming for more substantial margin improvement in 2026 [1].

Investors should keep an eye on benefit cost trends and the progress of the Workday partnership and Insperity HRScale, as these factors will impact mid-market growth prospects and profitability in the coming quarters.

References:
[1] https://www.nasdaq.com/articles/earnings-summary-insperity
[2] https://www.morningstar.com/news/business-wire/20250801061380/insperity-announces-second-quarter-results