INSPERITY INC

For the period ended Dec 31, 2023. Filed Feb 9, 2024.

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FY2023 · Filed Feb 9, 2024

NSP$50.87+3.0%Stored close · as of Nov 10, 2026

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Non-GAAP Financial Measures

Non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used to their most directly comparable GAAP financial measures as provided in the tables below.

Non-GAAP Measure	Definition	Benefit of Non-GAAP Measure
Non-bonus payroll cost	Non-bonus payroll cost is a non-GAAP financial measure that excludes the impact of bonus payrolls paid to our WSEEs.Bonus payroll cost varies from period to period, but has no direct impact to our ultimate workers’ compensation costs under the current program.	Our management refers to non-bonus payroll cost in analyzing, reporting and forecasting our workers’ compensation costs.We include these non-GAAP financial measures because we believe they are useful to investors in allowing for greater transparency related to the costs incurred under our current workers’ compensation program.
Adjusted cash, cash equivalents and marketable securities	Excludes funds associated with:• federal and state income tax withholdings,• employment taxes,• other payroll deductions, and• client prepayments.	We believe that the exclusion of the identified items helps us reflect the fundamentals of our underlying business model and analyze results against our expectations, against prior periods, and to plan for future periods by focusing on our underlying operations. We believe that the adjusted results provide relevant and useful information for investors because they allow investors to view performance in a manner similar to the method used by management and improves their ability to understand and assess our operating performance. Adjusted EBITDA is used by our lenders to assess our leverage and ability to make interest payments.
EBITDA	Represents net income computed in accordance with GAAP, plus:• interest expense,• income tax expense,• depreciation and amortization expense, and• amortization of SaaS implementation costs.
Adjusted EBITDA	Represents EBITDA plus:• non-cash stock-based compensation.
Adjusted net income	Represents net income computed in accordance with GAAP, excluding:• non-cash stock-based compensation.
Adjusted EPS	Represents diluted net income per share computed in accordance with GAAP, excluding:• non-cash stock-based compensation.

Following is a reconciliation of payroll cost (GAAP) to non-bonus payroll costs (non-GAAP):

(in thousands, except per WSEE per month)	Year Ended December 31,
2023 · 2022 · 2021
Per WSEE · Per WSEE · Per WSEE
Payroll cost	$36,655,495	$9,787	$34,188,092	$9,657	$28,345,623	$9,420
Less: Bonus payroll cost	4,978,439	1,329	4,959,987	1,401	4,719,217	1,568
Non-bonus payroll cost	$31,677,056	$8,458	$29,228,105	$8,256	$23,626,406	$7,852
% Change year over year	8.4%	2.4%	23.7%	5.1%	14.5%	6.9%

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Following is a reconciliation of cash, cash equivalents and marketable securities (GAAP) to adjusted cash, cash equivalents and marketable securities (non-GAAP):

(in thousands)	December 31, 2023	December 31, 2022
Cash, cash equivalents and marketable securities	$708,778	$765,896
Less:
Amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions	510,092	504,817
Client prepayments	27,592	36,800
Adjusted cash, cash equivalents and marketable securities	$171,094	$224,279

Following is a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP):

	Year Ended December 31,
(in thousands, except per WSEE per month) · 2023 · 2022 · 2021
Per WSEE · Per WSEE · Per WSEE
Net income	$171,382	$46	$179,350	$51	$124,080	$41
Income tax expense	53,696	14	66,075	19	44,238	15
Interest expense	27,137	7	14,207	4	7,458	2
Amortization of SaaS implementation costs	5,711	2	1,923	1	—	—
Depreciation and amortization	42,708	11	40,660	11	38,547	13
EBITDA	300,634	80	302,215	86	214,323	71
Stock-based compensation	52,996	14	50,080	14	40,623	14
Adjusted EBITDA	$353,630	$94	$352,295	$100	$254,946	$85
% Change year over year	0.4%	(6.0)%	38.2%	17.6%	(11.7)%	(17.5)%

Following is a reconciliation of net income (GAAP) to adjusted net income (non-GAAP):

	Year Ended December 31,
(in thousands)	2023	2022	2021
Net income	$171,382	$179,350	$124,080
Non-GAAP adjustments:
Stock-based compensation	52,996	50,080	40,623
Tax effect	(12,643)	(13,483)	(10,677)
Total non-GAAP adjustments, net	40,353	36,597	29,946
Adjusted net income	$211,735	$215,947	$154,026
% Change year over year	(2.0)%	40.2%	(15.1)%

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Following is a reconciliation of diluted EPS (GAAP) to adjusted EPS (non-GAAP):

	Year Ended December 31,
(amounts per share)	2023	2022	2021
Diluted EPS	$4.47	$4.64	$3.18
Non-GAAP adjustments:
Stock-based compensation	1.38	1.30	1.04
Tax effect	(0.33)	(0.35)	(0.27)
Total non-GAAP adjustments, net	1.05	0.95	0.77
Adjusted EPS	$5.52	$5.59	$3.95
% Change year over year	(1.3)%	41.5%	(14.9)%

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