Insperity (NSP) Q4 2024 earnings summary

Executive summary

• Q4 2024 delivered solid results with Adjusted EPS of $0.05 and Adjusted EBITDA of $23 million, both above the midpoint of guidance, despite a 2% year-over-year decline in paid worksite employees due to weak client hiring.

• Client retention reached 99% in Q4, and new client worksite employees paid increased 37% year-over-year, driven by a successful fall sales and retention campaign.

• Achieved a key inflection point with year-over-year growth turning positive in January 2025, following a successful fall sales and client retention campaign.

• Strategic partnership with Workday advanced, with $57M in 2024 operating expenses and significant milestones expected in 2025 to drive long-term growth and profitability.

• Full-year 2024 Adjusted EBITDA was $270 million and Adjusted EPS was $3.58, both above initial guidance midpoints but down 24% and 35% year-over-year, respectively.

Financial highlights

• Q4 2024 average paid worksite employees declined 2% year-over-year to 309,093, in line with expectations; client hiring remained weak.

• Q4 gross profit per worksite employee was $235/month, flat year-over-year; total gross profit declined 2% due to lower employee count.

• Full-year 2024 gross profit per worksite employee was $285/month, up 3% from 2023, with total gross profit up 1% despite a 1.6% drop in paid worksite employees.

• Operating expenses rose 17% in Q4 and 14% for the year, mainly from Workday partnership investments and inflation.

• $152M returned to shareholders in 2024 via $89M in dividends and $63M in share repurchases.

Outlook and guidance

• Q1 2025 average paid worksite employees expected at 306,500–309,000, up 0.9%–1.7% year-over-year.

• Full-year 2025 worksite employee growth forecasted at 2%–4%, with sequential quarterly growth of 1.5%–2%.

• 2025 Adjusted EBITDA guidance: $240–$285 million; Adjusted EPS: $3.10–$3.95.

• Benefits cost trend expected at 5%–6.5% in 2025, up from 4.3% in 2024.

• Operating expenses for 2025 planned flat versus 2024, with $62 million allocated to Workday partnership.