Insperity — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenues increased 2% to $1.651 billion, driven by a 4% increase in revenue per WSEE due to higher pricing, partially offset by a 2% decline in average paid WSEEs to 307,265.
• Q3 2026 gross profit increased 6% to $207 million, with gross profit per WSEE rising 8% to $225.
• Q3 2026 operating expenses decreased 5% to $209 million, primarily due to lower compensation costs from reduced corporate staff.
• Q3 2026 reported net loss improved 95% to $1 million; diluted EPS improved 96% to $(0.02).
• Q3 2026 adjusted EBITDA increased 210% to $31 million; adjusted EPS increased 210% to $0.22.
• Year-to-date (YTD) 2026 revenues increased 2% to $5.232 billion on a 1% decline in average paid WSEEs to 305,359.
• YTD 2026 gross profit was flat at $726 million, while gross profit per WSEE increased 1% to $264.
• YTD 2026 operating expenses declined 5% to $660 million.
• YTD 2026 reported net income increased 38% to $36 million; diluted EPS increased 38% to $0.95.
• YTD 2026 adjusted EBITDA increased 18% to $170 million; adjusted EPS increased 13% to $1.85.
• Adjusted cash at September 30, 2026, totaled $119 million; outstanding borrowings under the credit facility were $420 million.
• Cash outlays in the first nine months of 2026 included $10 million for share repurchases, $69 million in dividends, and $26 million in capital expenditures.

Guidance and Future Outlook:

• Q4 2026 adjusted EPS guidance is $0.07 to $0.42 (year-over-year increase of 112% to 170%).
• Q4 2026 adjusted EBITDA guidance is $24 million to $44 million (year-over-year increase of 285% to 438%).
• Q4 2026 average WSEE guidance is 306,000 (year-over-year decrease of 2.0%).
• Full Year 2026 adjusted EPS guidance is $1.93 to $2.28 (year-over-year increase of 87% to 121%).
• Full Year 2026 adjusted EBITDA guidance is $194 million to $214 million (year-over-year increase of 48% to 63%).
• Full Year 2026 average WSEE guidance is 305,500 to 306,000 (year-over-year decrease of 1.5% to 1.3%).
• Management anticipates AI will strengthen demand for HR solutions as small and midsize businesses navigate transformation.

Business Segments and Product Lines:

• Benefits costs per covered employee increased 4% in Q3 2026 and 5% YTD 2026 compared to the prior year period.
• Non-bonus payroll cost per WSEE increased 2% in Q3 2026 and 2% YTD 2026 compared to the prior year period.
• The company continues to leverage a strategic partnership with Workday, Inc., including a joint solution.

Market and Competitive Landscape:

• The company operates in the human resources services industry, specifically the professional employer organization (PEO) sector.
• Management notes increasing competition for highly skilled workers and evolving employee expectations regarding the workplace.

Risks and Challenges:

• Risks include adverse economic conditions, labor shortages, inflation, and changes in U.S. trade policy.
• Potential liabilities associated with employee retention tax credits under COVID-19 relief programs.
• Vulnerability to regional economic factors due to geographic market concentration.
• Risks related to the financial solvency of workers' compensation carriers and other insurers.
• Potential for increases in health insurance costs and workers' compensation rates.
• Risks regarding the ability to adjust service fees for increases in state and local taxes.
• Risks related to data theft, cyberattacks, and security vulnerabilities.
• Potential failure to fully realize benefits of the strategic partnership with Workday, Inc.

Management Commentary and Tone:

• Paul J. Sarvadi, Chairman and CEO, stated the company delivered solid results reflecting progress on margin recovery and restoring earnings power.
• James D. Allison, CFO, noted a key milestone in the margin recovery plan with year-over-year growth in gross profit per worksite employee and continued operating expense discipline.
• Management expressed confidence that combining AI with HR professional experience will drive long-term growth and shareholder value.

Other Key Points:

• The company repurchased 131,000 shares during the quarter at a total cost of $6 million.
• Total share repurchases in the first nine months of 2026 amounted to approximately 302,000 shares for $10 million.
• Dividends paid in the first nine months of 2026 totaled $69 million.
• Capital expenditures in the first nine months of 2026 were $26 million.
• A conference call was hosted on October 29, 2026, at 8:30 a.m. ET to discuss results and updated outlook.