INSPERITY INC
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
NSP$49.82-2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001000753-24-000046
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsNon-GAAP Financial MeasuresCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001000753-24-000063
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsNon-GAAP Financial MeasuresThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 155 previous paragraphs and 152 current paragraphs.
94 unchanged; 46 reworded; 8 added; 11 removed; 4 previous and 4 current paragraphs rearranged.
Tables are not compared: 28 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
•Adjusted net income and adjusted EPS both decreased 73% to $15 million and $0.39, respectively
Current report
•Adjusted EBITDA decreased 59% to $39 million
Current report
•Adjusted net income and adjusted EPS decreased 27% and 26% to $134 million and $3.53, respectively
Current report
•Adjusted EBITDA decreased 17% to $247 million
Current report
Net Income and
Current report
•Workers’ compensation costs increased 2%, or $1 per WSEE per month, in YTD 2024 compared to YTD 2023.
Current report
•Advertising expense for Q3 2024 increased 29% to $9 million, or $2 per WSEE per month, compared to Q3 2023 primarily due to an increase in internet and radio advertising.
Current report
•General and administrative expenses for Q3 2024 increased 33% to $53 million, or $13 per WSEE per month, compared to Q3 2023. The increase was primarily due to increased professional services fees, which includes expenses related to the implementation of our Workday strategic partnership, software licensing and maintenance costs, and amortization of SaaS implementation costs.
Removed paragraphs (11)
Previous report
•Adjusted EPS increased 34% to $0.86
Previous report
•Adjusted EBITDA increased 29% to $66 million
Previous report
•Adjusted EPS decreased 5% to $3.13
Previous report
•Adjusted EBITDA increased 2% to $208 million
Previous report
Year-over-Year Growth Percentage
Previous report
Year-over-Year Growth Percentage
Previous report
(in millions)
Previous report
(in millions)
Previous report
•Workers’ compensation costs decreased 5%, or $1 per WSEE per month, in YTD 2024 compared to YTD 2023.
Previous report
•General and administrative expenses for Q2 2024 increased 30% to $57 million, or $15 per WSEE per month, compared to Q2 2023. The increase was primarily due to increased software licensing, maintenance costs, SaaS implementation expense, and professional services fees.
Previous report
•Depreciation and amortization expense for YTD 2024 increased 5% to $22 million, or $1 per WSEE per month, compared to YTD 2023. The increase was primarily due to increased capital expenditures related to computer hardware and software and software development costs.
Reworded paragraphs (46)
Previous wording
•Average number of WSEEs paid per month decreased 1%
Current wording
•Average number of WSEEs paid per month decreased 2%
Previous wording
•Net income and diluted earnings per share (“diluted EPS”) increased 50% and 45% to $18 million and $0.48, respectively
Current wording
•Net income and diluted earnings per share (“EPS”) decreased 93% and 94% to $3 million and $0.07, respectively
Previous wording
•Net income and diluted EPS decreased 9% and 8% to $97 million and $2.56, respectively
Current wording
•Net income and diluted EPS decreased 34% and 33% to $100 million and $2.63, respectively
Previous wording
Please read “Non-GAAP Financial Measures” for a reconciliation of adjusted EBITDA and adjusted EPS to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”).
Current wording
Please read “Non-GAAP Financial Measures” for a reconciliation of adjusted EBITDA, adjusted net income, and adjusted EPS to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”).
Previous wording
•During Q2 2024, average WSEEs paid decreased 1% compared to Q2 2023. The number of WSEEs paid from new client sales remained consistent with Q2 2023, while the net gain in our client base and client retention declined compared to Q2 2023.
Current wording
•During Q3 2024, average WSEEs paid decreased 2% compared to Q3 2023. The number of WSEEs paid from new client sales declined compared with Q3 2023, while client retention and the net change in our client base remained consistent with Q3 2023.
Previous wording
•During the first six months of 2024 (“YTD 2024”), average WSEEs paid decreased 1% compared to the first six months of 2023 (“YTD 2023”). The number of WSEEs paid from new client sales remained consistent with YTD 2023, while the net gain in our client base and client retention declined when compared to YTD 2023.
Current wording
•During the first nine months of 2024 (“YTD 2024”), average WSEEs paid decreased 1% compared to the first nine months of 2023 (“YTD 2023”). The number of WSEEs paid from new client sales, the net change in our client base, and client retention declined when compared to YTD 2023.
Previous wording
Our revenues are primarily dependent on the number of clients enrolled, the resulting number of WSEEs paid each period and the number of WSEEs enrolled in our benefit plans. Because our monthly markup is computed in part as a percentage of payroll cost, certain revenues are also affected by the payroll cost of WSEEs, which may fluctuate based on the composition of the WSEE base, inflationary effects on wage levels and differences in the local economies of our markets.
Current wording
percentage of payroll cost, certain revenues are also affected by the payroll cost of WSEEs, which may fluctuate based on the composition of the WSEE base, inflationary effects on wage levels and differences in the local economies of our markets.
Previous wording
•Revenues per WSEE per month increased 3%, or $50, partially offset by a 1% decrease in average WSEEs paid.
Current wording
•Revenues per WSEE per month increased 3%, or $44, partially offset by a 2% decrease in average WSEEs paid.
Previous wording
Our revenues for YTD 2024 were $3.4 billion, an increase of 2%, primarily due to the following:
Current wording
Our revenues for YTD 2024 were $5.0 billion, an increase of 1%, primarily due to the following:
Previous wording
•Revenues per WSEE per month increased 3%, or $46, partially offset by a 1% decrease in average WSEEs paid.
Current wording
•Revenues per WSEE per month increased 3%, or $48, partially offset by a 1% decrease in average WSEEs paid.
Previous wording
The middle market sector, which we generally define as those companies with approximately 150 to 5,000 WSEEs, includes smaller clients whose number of WSEEs has grown to approximately 150 or more WSEEs. Currently, we have a dedicated sales management, service personnel, and consulting staff who concentrate solely on the middle market sector. Our average number of WSEEs per month in our middle market sector decreased 4% during YTD 2024 compared to YTD 2023, representing approximately 25% and 26% of our total average paid WSEEs during YTD 2024 and YTD 2023, respectively.
Current wording
The middle market sector, which we generally define as those companies with approximately 150 to 5,000 WSEEs, includes smaller clients whose number of WSEEs has grown to approximately 150 or more WSEEs. Currently, we have a dedicated sales management, service personnel, and consulting staff who concentrate solely on the middle market sector. Our average number of WSEEs per month in our middle market sector decreased 4% during YTD 2024 compared to YTD 2023, representing approximately 26% of our total average paid WSEEs in both YTD 2024 and YTD 2023.
Previous wording
Gross profit for Q2 2024 increased 16% to $260 million compared to $225 million in Q2 2023. Gross profit per WSEE per month for Q2 2024 increased $41 to $282 compared to $241 in Q2 2023 due primarily to higher average pricing and lower direct costs, as discussed below.
Current wording
Gross profit for Q3 2024 decreased 11% to $229 million compared to $258 million in Q3 2023. Gross profit per WSEE per month for Q3 2024 decreased $26 to $247 compared to $273 in Q3 2023 due primarily to higher direct costs, offset in part by higher average pricing, as discussed below.
Previous wording
Our pricing objectives attempt to achieve a level of revenue per WSEE that matches or exceeds changes in primary direct costs and operating expenses. Our revenues per WSEE per month increased $46 due to higher average pricing of 3%.
Current wording
Our pricing objectives attempt to achieve a level of revenue per WSEE that matches or exceeds changes in primary direct costs and operating expenses. Our revenues per WSEE per month increased $44 due to higher average pricing of 3%.
Previous wording
The net decrease in direct costs between Q2 2024 and Q2 2023 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $25 million as discussed below. The $5 per WSEE per month increase in direct costs
Current wording
The net increase in direct costs between Q3 2024 and Q3 2023 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $14 million as discussed below. The $70 per WSEE per month increase in direct costs is due primarily to the direct cost component changes as follows:
Previous wording
•The cost of group health insurance and related employee benefits increased $1 per WSEE per month, or 1.9% on a cost per covered employee basis. We did not experience the number and severity of large claims in YTD 2024 as compared to YTD 2023.
Current wording
•The cost of group health insurance and related employee benefits increased $45 per WSEE per month and increased 7.7% on a cost per covered employee basis in Q3 2024 as compared to Q3 2023.
Previous wording
•The percentage of WSEEs covered under our health insurance plans was 64% in Q2 2024 compared to 65% in Q2 2023.
Current wording
•The percentage of WSEEs covered under our health insurance plans was 63% in Q3 2024 compared to 65% in Q3 2023.
Previous wording
•Reported results include changes in estimated claims run-off related to prior periods, which was a reduction in costs of $25 million, or $27 per WSEE per month, in Q2 2024 compared to an increase in costs of $1 million, or $1 per WSEE per month, in Q2 2023.
Current wording
•Reported results include changes in estimated claims run-off related to prior periods, which was a reduction in costs of $12 million, or $13 per WSEE per month, in Q3 2024 compared to a decrease in costs of $23 million, or $24 per WSEE per month, in Q3 2023.
Previous wording
Our continued discipline around our client selection, workplace safety and claims management contributed to the small increase in our cost per WSEE and, as a result, has allowed for claims within our policy periods to be closed out at amounts below our original cost estimates.
Current wording
Our continued discipline around our client selection, workplace safety and claims management contributed to the increase in our cost per WSEE and, as a result, has allowed for claims within our policy periods to be closed out at amounts below our original cost estimates.
Previous wording
•Workers’ compensation costs increased $1 per WSEE per month in Q2 2024 compared to Q2 2023 while non-bonus payroll costs increased 1%.
Current wording
•Workers’ compensation costs increased $4 per WSEE per month in Q3 2024 compared to Q3 2023 while non-bonus payroll costs remained flat.
Previous wording
•As a percentage of non-bonus payroll cost, workers’ compensation costs were 0.23% in YTD 2024 and 0.24% in YTD 2023.
Current wording
•As a percentage of non-bonus payroll cost, workers’ compensation costs were 0.25% in Q3 2024 compared to 0.21% in Q3 2023.
Previous wording
•We recorded a reduction in workers’ compensation costs of $7 million, or 0.09% of non-bonus payroll costs in Q2 2024, as a result of closing out claims at lower than expected costs. In Q2 2023, we recorded a reduction of $8 million, or 0.10% of non-bonus payroll costs.
Current wording
•We recorded a reduction in workers’ compensation costs of $8 million, or 0.09% of non-bonus payroll costs in Q3 2024, as a result of closing out claims at lower than expected costs. In Q3 2023, we recorded a reduction of $11 million, or 0.13% of non-bonus payroll costs.
Previous wording
•Payroll taxes increased 2%, or $20 per WSEE per month, while payroll costs remained flat.
Current wording
•Payroll taxes increased 2% on a 3% increase in payroll costs, or $20 per WSEE per month.
Previous wording
•Payroll taxes as a percentage of payroll costs were 7% in both Q2 2024 and Q2 2023.
Current wording
•Payroll taxes as a percentage of payroll costs were 6% in both Q3 2024 and Q3 2023.
Previous wording
Gross profit for YTD 2024 increased 9% to $605 million compared to $557 million in YTD 2023. Gross profit per WSEE per month for YTD 2024 increased $30 to $330 compared to $300 in YTD 2023 due primarily to higher average pricing, offset in part by higher direct costs, as discussed below.
Current wording
Gross profit for YTD 2024 increased 2% to $834 million compared to $815 million in YTD 2023. Gross profit per WSEE per month for YTD 2024 increased $11 to $302 compared to $291 in YTD 2023 due primarily to higher average pricing, offset in part by higher direct costs, as discussed below.
Previous wording
Our pricing objectives attempt to achieve a level of revenue per WSEE that matches or exceeds changes in primary direct costs and operating expenses. Our revenues per WSEE per month increased $50 due to higher average pricing of 3%.
Current wording
Our pricing objectives attempt to achieve a level of revenue per WSEE that matches or exceeds changes in primary direct costs and operating expenses. Our revenues per WSEE per month increased $48 due to higher average pricing of 3%.
Previous wording
The net decrease in direct costs between YTD 2024 and YTD 2023 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $18 million as discussed below. The $20 per WSEE per month increase in direct costs is due primarily to the direct cost component changes as follows:
Current wording
The net decrease in direct costs between YTD 2024 and YTD 2023 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $17 million as discussed below. The $37 per WSEE per month increase in direct costs is due primarily to the direct cost component changes as follows:
Previous wording
•Reported results include changes in estimated claims run-off related to prior periods, which was a decrease in costs of $26 million, or $14 per WSEE per month, in YTD 2024 compared to a decrease in costs of $10 million, or $5 per WSEE per month, in YTD 2023.
Current wording
•Reported results include changes in estimated claims run-off related to prior periods, which was a decrease in costs of $32 million, or $12 per WSEE per month, in YTD 2024 compared to a decrease in costs of $14 million, or $5 per WSEE per month, in YTD 2023.
Previous wording
•As a percentage of non-bonus payroll cost, workers’ compensation costs were 0.23% in both Q2 2024 and Q2 2023.
Current wording
•As a percentage of non-bonus payroll cost, workers’ compensation costs were 0.23% in both YTD 2024 and YTD 2023.
Previous wording
•We recorded a reduction in workers’ compensation costs of $17 million, or 0.11% of non-bonus payroll costs, in YTD 2024 compared to a reduction of $15 million, or 0.10% of non-bonus payroll costs, in YTD 2023, primarily as a result of closing out claims at lower than expected costs.
Current wording
•We recorded a reduction in workers’ compensation costs of $25 million, or 0.11% of non-bonus payroll costs, in YTD 2024 compared to a reduction of $26 million, or 0.11% of non-bonus payroll costs, in YTD 2023, primarily as a result of closing out claims at lower than expected costs.
Previous wording
•Payroll taxes increased 2% on a 1% increase in payroll costs, or $19 per WSEE per month.
Current wording
•Payroll taxes increased 2% on a 1% increase in payroll costs, or $20 per WSEE per month.
Previous wording
Operating expenses for Q2 2024 increased 13% to $237 million compared to $209 million in Q2 2023. Operating expenses per WSEE per month for Q2 2024 increased 15% to $257 compared to $224 in Q2 2023.
Current wording
Operating expenses for Q3 2024 increased 15% to $228 million compared to $199 million in Q3 2023. Operating expenses per WSEE per month for Q3 2024 increased 17% to $246 compared to $210 in Q3 2023.
Previous wording
•Salaries of corporate and sales staff for Q2 2024 increased 15% to $126 million, or $18 per WSEE per month, compared to Q2 2023. The increase was primarily due to a 6% increase in BPA, service and support headcount in Q2 2024 compared to Q2 2023 and higher incentive compensation accruals in Q2 2024.
Current wording
•Salaries of corporate and sales staff for Q3 2024 increased 11% to $127 million, or $17 per WSEE per month, compared to Q3 2023. The increase was primarily due to a 6% increase in BPA, service and support headcount in Q3 2024 compared to Q3 2023.
Previous wording
•Stock-based compensation expense for Q2 2024 increased 33% to $20 million, or $6 per WSEE per month, compared to Q2 2023. The increase was primarily due to an increase in the number of stock awards anticipated to be earned related to performance-based awards granted under our long-term incentive plans based on our higher than expected operating results in Q2 2024 and time-vested restricted stock unit awards issued under our incentive plan.
Current wording
•Stock-based compensation expense for Q3 2024 increased 6% to $17 million, or $2 per WSEE per month, compared to Q3 2023. The increase was primarily due to time-vested restricted stock unit awards issued under our incentive plan, partially offset by a decrease in the stock awards anticipated to be earned related to performance-based awards granted under our long-term incentive plans in Q3 2024.
Previous wording
Operating expenses for YTD 2024 increased 13% to $474 million compared to $420 million in YTD 2023. Operating expenses per WSEE per month for YTD 2024 increased 15% to $259 compared to $226 in YTD 2023.
Current wording
Operating expenses for YTD 2024 increased 13% to $702 million compared to $619 million in YTD 2023. Operating expenses per WSEE per month for YTD 2024 increased 15% to $254 compared to $221 in YTD 2023.
Previous wording
•Salaries of corporate and sales staff for YTD 2024 increased 13% to $266 million, or $18 per WSEE per month, compared to YTD 2023. The increase was primarily due to a 6% increase in BPA, service and support headcount and staff compensation levels, and higher incentive compensation expense in YTD 2024 compared to YTD 2023.
Current wording
•Salaries of corporate and sales staff for YTD 2024 increased 13% to $393 million, or $18 per WSEE per month, compared to YTD 2023. The increase was primarily due to a 6% increase in BPA, service and support headcount and staff compensation levels in YTD 2024 compared to YTD 2023.
Previous wording
•Stock-based compensation expense for YTD 2024 increased 15% to $30 million, or $2 per WSEE per month, compared to YTD 2023. The increase was primarily due to time-vested restricted stock unit awards issued under our incentive plan.
Current wording
•Stock-based compensation expense for YTD 2024 increased 12% to $47 million, or $2 per WSEE per month, compared to YTD 2023. The increase was primarily due to time-vested restricted stock unit awards issued under our incentive plan.
Previous wording
•Advertising expense for YTD 2024 decreased 17% to $19 million, or $2 per WSEE per month, compared to YTD 2023 due to a change in timing of advertising spend.
Current wording
•Advertising expense for YTD 2024 decreased 7% to $28 million, or $1 per WSEE per month, compared to YTD 2023 due to a change in timing of advertising spend.
Previous wording
•General and administrative expenses for YTD 2024 increased 24% to $114 million, or $13 per WSEE per month, compared to YTD 2023. The increase was primarily due to increased professional services fees, software licensing and maintenance costs and amortization of SaaS implementation costs.
Current wording
•General and administrative expenses for YTD 2024 increased 27% to $167 million, or $13 per WSEE per month, compared to YTD 2023. The increase was primarily due to increased professional services fees, which includes expenses related to the implementation of our Workday strategic partnership, software licensing and maintenance costs, and amortization of SaaS implementation costs.
Previous wording
For the six months ended June 30, 2024, our provision for income taxes differed from the U.S. statutory rate primarily due to state income taxes, non-deductible expenses and vesting of restricted and long-term incentive stock awards. During the first six months of 2024 we did not recognize an income tax benefit as compared to an income tax benefit of $5 million for the first six months of 2023, related to the vesting of long-term incentive and restricted stock awards.
Current wording
For the nine months ended September 30, 2024, our provision for income taxes differed from the U.S. statutory rate primarily due to state income taxes, non-deductible expenses and vesting of restricted and long-term incentive stock awards. During the first nine months of 2024 we did not recognize an income tax benefit as compared to an income tax benefit of $5 million for the first nine months of 2023, related to the vesting of long-term incentive and restricted stock awards. During Q3 2024, we recognized a $1 million, or $0.02 per share, tax benefit related to research and development activities pertaining to the 2023 tax year.
Previous wording
We had $692 million in cash, cash equivalents and marketable securities at June 30, 2024, of which approximately $459 million was payable in early July 2024 for withheld federal and state income taxes, employment taxes and other payroll deductions, approximately $22 million represented client prepayments that were payable in July 2024, and includes $97 million of funds we received in late June 2024 from the Internal Revenue Service related to employee retention tax credits claimed by our PEO clients under the COVID relief programs that were distributed to clients in early July 2024. At June 30, 2024, we had working capital of $238 million compared to $159 million at December 31, 2023. We currently believe that our cash on hand, marketable securities, cash flows from operations, and availability under the Facility will be adequate to meet our liquidity requirements for the remainder of 2024. We intend to rely on these same sources, as well as public and private debt or equity financing, to meet our longer-term liquidity and capital needs.
Current wording
We had $486 million in cash, cash equivalents and marketable securities at September 30, 2024, of which approximately $255 million was payable in early October 2024 for withheld federal and state income taxes, employment taxes and other payroll deductions, approximately $19 million represented client prepayments that were payable in October 2024. At September 30, 2024, we had working capital of $200 million compared to $159 million at December 31, 2023. We currently believe that our cash on hand, marketable securities, cash flows from operations, and availability under the Facility will be adequate to meet our liquidity requirements for the remainder of 2024. We intend to rely on these same sources, as well as public and private debt or equity financing, to meet our longer-term liquidity and capital needs.
Showing the first 40 of 46 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
EPS andYear-over-Year Growth Percentage(amounts per share)
Current report — wording carried from elsewhere
Our revenues are primarily dependent on the number of clients enrolled, the resulting number of WSEEs paid each period and the number of WSEEs enrolled in our benefit plans. Because our monthly markup is computed in part as a
Current report — wording carried from elsewhere
•The cost of group health insurance and related employee benefits increased $16 per WSEE per month, or 3.9% on a cost per covered employee basis.
Current report — wording carried from elsewhere
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
is due primarily to the direct cost component changes as follows:
Previous report — wording carried elsewhere
•The cost of group health insurance and related employee benefits decreased $18 per WSEE per month and decreased 0.4% on a cost per covered employee basis in Q2 2024 as compared to Q2 2023. We did not experience the number and severity of large claims in Q2 2024 as compared to Q2 2023.
Previous report — wording carried elsewhere
•Advertising expense for Q2 2024 decreased 29% to $12 million, or $5 per WSEE per month, compared to Q2 2023 due to a change in timing of advertising spend.
Previous report — wording carried elsewhere
reporting period was also a Friday, client prepayments were $31 million and employment taxes and other deductions were $366 million.