INSPERITY, INC.

Previous wording

•Average number of WSEEs paid per month decreased 1%, which was partially impacted by our margin recovery efforts

Current wording

•Average number of WSEEs paid per month decreased 1%

Previous wording

•Net income and diluted earnings per share (“EPS”) both decreased 35% to $33 million and $0.88, respectively

Current wording

•Net income and diluted EPS both decreased 20% to $37 million and $0.97, respectively

Previous wording

•During Q1 2026, average WSEEs paid decreased 1% compared to Q1 2025. The number of WSEEs paid from new client sales and client retention decreased due in part to our margin recovery efforts, while the net change in our client base increased compared with Q1 2025.

Current wording

•During Q2 2026, average WSEEs paid decreased 1% compared to Q2 2025. The number of WSEEs paid from new client sales and client retention decreased due in part to our margin recovery efforts, while the net change in our client base increased compared to Q2 2025.

Previous wording

Our revenues for Q1 2026 were $1.9 billion, an increase of 2%, primarily due to the following:

Current wording

Our revenues for Q2 2026 were $1.7 billion, an increase of 2%, primarily due to the following:

Previous wording

•Revenues per WSEE per month increased 3%, or $55, while the average WSEEs paid declined 1%

Current wording

•Revenues per WSEE per month increased 3%, or $50

Previous wording

We generally define the middle market sector as those companies with approximately 150 to 5,000 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 increased 9% during Q1 2026 compared to Q1 2025, representing approximately 29% and 26% of our total average paid WSEEs in Q1 2026 and Q1 2025, respectively.

Current wording

We generally define the middle market sector as those companies with approximately 150 to 5,000 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 increased 10% during YTD 2026 compared to YTD 2025, representing approximately 29% and 26% of our total average paid WSEEs in YTD 2026 and YTD 2025, respectively.

Previous wording

Gross profit for Q1 2026 decreased 3% to $302 million compared to $310 million in Q1 2025. Gross profit per WSEE per month for Q1 2026 decreased $6 to $332 compared to $338 in Q1 2025 due primarily to higher direct costs, offset in part by higher average pricing, as discussed below.

Current wording

Gross profit for Q2 2026 decreased 3% to $217 million compared to $223 million in Q2 2025. Gross profit per WSEE per month for Q2 2026 decreased $3 to $237 compared to $240 in Q2 2025 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 $55 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 $50 due to higher average pricing of 3%.

Previous wording

•The cost of group health insurance and related employee benefits increased $28 per WSEE per month and increased 5.2% on a cost per covered employee basis in Q1 2026 as compared to Q1 2025.

Current wording

•The cost of group health insurance and related employee benefits increased $25 per WSEE per month and increased 5.2% on a cost per covered employee basis in Q2 2026 as compared to Q2 2025.

Previous wording

•The percentage of WSEEs covered under our health insurance plans was 63% in Q1 2026 compared to 64% in Q1 2025.

Current wording

•The percentage of WSEEs covered under our health insurance plans was 62% in Q2 2026 compared to 63% in Q2 2025.

Previous wording

•Our continued discipline around our client selection, workplace safety and claims management has allowed for claims to be closed out at amounts below our original cost estimates, resulting in a reduction in workers’ compensation costs of $5 million, or 0.05% of non-bonus payroll costs in Q1 2026, compared to a reduction of $7 million, or 0.08% of non-bonus payroll costs in Q1 2025.

Current wording

•Our continued discipline around our client selection, workplace safety and claims management has allowed for claims to be closed out at amounts below our original cost estimates, resulting in a reduction in workers’ compensation costs of $3 million, or 0.03% of non-bonus payroll costs in Q2 2026, compared to a reduction of $8 million, or 0.09% of non-bonus payroll costs in Q2 2025.

Previous wording

•Payroll taxes increased 2% on a 0.3% decrease in payroll costs, or $27 per WSEE per month.

Current wording

•Payroll taxes increased 2% on a 4% increase in payroll costs, or $22 per WSEE per month.

Previous wording

•Payroll taxes as a percentage of payroll costs were 8% in both Q1 2026 and Q1 2025.

Current wording

•Payroll taxes as a percentage of payroll costs were 7% in both Q2 2026 and Q2 2025.

Previous wording

The net decrease in direct costs between Q1 2026 and Q1 2025 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $12 million as discussed below. The $61 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 2026 and YTD 2025 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $8 million as discussed below. The $58 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 reduction in costs of $2 million, or $2 per WSEE per month, in Q1 2026 compared to an increase in costs of $12 million, or $13 per WSEE per month, in Q1 2025.

Current wording

•Reported results include changes in estimated claims run-off related to prior periods, which was a decrease in costs of $4 million, or $2 per WSEE per month, in YTD 2026 compared to an increase in costs of $11 million, or $6 per WSEE per month, in YTD 2025.

Previous wording

•Workers’ compensation costs increased 30%, or $7 per WSEE per month, in Q1 2026 compared to Q1 2025.

Current wording

•Workers’ compensation costs increased 33%, or $7 per WSEE per month, in YTD 2026 compared to YTD 2025.

Previous wording

•As a percentage of non-bonus payroll cost, workers’ compensation costs were 0.31% in Q1 2026 compared to 0.24% in Q1 2025.

Current wording

•As a percentage of non-bonus payroll cost, workers’ compensation costs were 0.31% in YTD 2026 compared to 0.24% in YTD 2025.

Previous wording

Operating expenses for Q1 2026 decreased 1% to $240 million compared to $242 million in Q1 2025. Operating expenses per WSEE per month for Q1 2026 remained flat compared to Q1 2025.

Current wording

Operating expenses for Q2 2026 decreased 8% to $211 million compared to $230 million in Q2 2025. Operating expenses per WSEE per month for Q2 2026 decreased 7% to $230 compared to $248 in Q2 2025.

Previous wording

•Salaries of corporate and sales staff for Q1 2026 decreased 8% to $131 million, or $11 per WSEE per month, compared to Q1 2025. The decrease was primarily due to an 8% decrease in BPA, service and support headcount in Q1 2026 compared to Q1 2025.

Current wording

•Salaries of corporate and sales staff for Q2 2026 decreased 11% to $115 million, or $14 per WSEE per month, compared to Q2 2025. The decrease was primarily due to a 6% decrease in BPA, service and support headcount and staff compensation levels in Q2 2026 compared to Q2 2025.

Previous wording

•Advertising expense for Q1 2026 increased 57% to $11 million, or $4 per WSEE per month, compared to Q1 2025. The increase was primarily due to increased sponsorships and digital advertising.

Current wording

•Advertising expense for Q2 2026 increased 27% to $14 million, or $3 per WSEE per month, compared to Q2 2025. The increase was primarily due to the timing of sponsorships and digital advertising.

Previous wording

•Stock-based compensation expense for Q1 2026 increased 18% to $13 million, or $2 per WSEE per month, compared to Q1 2025. The increase was primarily due to additional compensation expense related to performance-based restricted stock unit awards, partially offset by lower compensation expense related to time-based restricted stock unit awards.

Current wording

•Stock-based compensation expense for YTD 2026 decreased 16% to $26 million, or $3 per WSEE per month, compared to YTD 2025. The decrease was primarily due to lower value time-based restricted stock unit awards granted under our incentive plan in 2026, offset in part by an increase in LTIP awards expense.

Previous wording

Interest income decreased $3 million in Q1 2026 compared to Q1 2025 due to lower interest rates on overnight, investment and deposit holdings.

Current wording

Interest income decreased $5 million in YTD 2026 compared to YTD 2025 primarily due to lower interest rates on overnight, investment and deposit holdings.

Previous wording

Interest expense was flat in Q1 2026 compared to Q1 2025.

Current wording

Interest expense was flat in YTD 2026 compared to YTD 2025.

Previous wording

For the three months ended March 31, 2026, 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 three months of 2026, we recognized additional income tax of $10 million related to the vesting of long-term incentive and restricted stock awards, primarily due to the vesting date price being below the grant date price.

Current wording

For the six months ended June 30, 2026, 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. The decrease in net income without a corresponding change in non-deductible expenses resulted in a higher effective tax rate for the period. During the first six months of 2026 we recognized $9 million of income tax expense related to the vesting of

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

We had $555 million in cash, cash equivalents and marketable securities at March 31, 2026, of which approximately $415 million was payable in April 2026 for withheld federal and state income taxes, employment taxes and other payroll deductions. Approximately $104 million represented client prepayments that were invoiced in April 2026. At March 31, 2026, we had working capital of $142 million compared to $102 million at December 31, 2025. 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 2026. 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 $619 million in cash and cash equivalents at June 30, 2026, of which approximately $481 million was payable in July 2026 for withheld federal and state income taxes, employment taxes and other payroll deductions. Approximately $43 million represented client prepayments that were invoiced in July 2026 . During the second quarter 2026, we borrowed $50 million under the Facility for working capital purposes related to fluctuations in the timing of funding our direct cost programs. At June 30, 2026, we had working capital of $180 million compared to $102 million at December 31, 2025. We currently believe that our cash on hand, cash flows from operations, and availability under the Facility will be adequate to meet our liquidity requirements for the remainder of 2026. 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.

Previous wording

As of March 31, 2026, we had outstanding letters of credit and borrowings totaling $370 million under the Facility. Please read Note 5 to the Consolidated Financial Statements, “Long-Term Debt,” for additional information.

Current wording

As of June 30, 2026, we had outstanding letters of credit and borrowings totaling $420 million under the Facility. Please read Note 5 to the Consolidated Financial Statements, “Long-Term Debt,” for additional information.

Previous wording

Net cash used in operating activities in the first three months of 2026 was $67 million. Our primary source of cash from operations is the comprehensive service fee and payroll funding we collect from our clients. Our cash and cash equivalents, and thus our reported cash flows from operating activities, are significantly impacted by various external and internal factors, which are reflected in part by the changes in our balance sheet accounts. These include the following:

Current wording

Net cash used in operating activities in the first six months of 2026 was $19 million. Our primary source of cash from operations is the comprehensive service fee and payroll funding we collect from our clients. Our cash and cash equivalents, and thus our reported cash flows from operating activities, are significantly impacted by various external and internal factors, which are reflected in part by the changes in our balance sheet accounts. These include the following:

Previous wording

•Timing of client payments / payroll taxes — We typically collect our comprehensive service fee, along with the client’s payroll funding, from clients no later than the same day as the payment of WSEE payrolls and associated payroll taxes. Therefore, the last business day of a reporting period has a substantial impact on our reporting of operating cash flows. For example, many WSEEs are paid on Fridays; therefore, operating cash flows decrease in the reporting periods that end on a Friday or a Monday. In the three months ended March 31, 2026, the last business day of the reporting period was a Tuesday, client prepayments were $104 million and employment taxes and other deductions were $415 million. In the three months ended March 31, 2025, the last business day of the reporting period was a Monday, client prepayments were $40 million and employment taxes and other deductions were $404 million.

Current wording

•Timing of client payments / payroll taxes — We typically collect our comprehensive service fee, along with the client’s payroll funding, from clients no later than the same day as the payment of WSEE payrolls and associated payroll taxes. Therefore, the last business day of a reporting period has a substantial impact on our reporting of operating cash flows. For example, many WSEEs are paid on Fridays; therefore, operating cash flows decrease in the reporting periods that end on a Friday or a Monday. In the six months ended June 30, 2026, the last business day of the reporting period was a Tuesday, client prepayments were $43 million and employment taxes and other deductions were $481 million. In the six months ended June 30, 2025, the last business day of the reporting period was a Monday, client prepayments were $26 million and employment taxes and other deductions were $316 million.

Previous wording

•Medical plan funding — Our health care contract with United establishes participant cash funding rates 90 days in advance of the beginning of a reporting quarter. Therefore, changes in the participation level of the United plan have a direct impact on our operating cash flows. In addition, changes to the funding rates, which are solely determined by United based primarily upon recent claim history and anticipated cost trends, also have a significant impact on our operating cash flows. As of March 31, 2026, Program Costs were less than the net premiums paid and owed to United by $41 million, which is included in prepaid insurance, a current asset, on our Consolidated Balance Sheet at March 31, 2026. In addition, the premiums owed to United at March 31, 2026, were $62 million, which is included in accrued health insurance costs, a current liability, on our Consolidated Balance Sheet.

Current wording

•Medical plan funding — Our health care contract with United establishes participant cash funding rates 90 days in advance of the beginning of a reporting quarter. Therefore, changes in the participation level of the United plan have a direct impact on our operating cash flows. In addition, changes to the funding rates, which are solely determined by United based primarily upon recent claim history and anticipated cost trends, also have a significant impact on our operating cash flows. As of June 30, 2026, Program Costs were less than the net premiums paid and owed to United by $40 million, which is included in prepaid insurance, a current asset, on our Consolidated Balance Sheet at June 30, 2026. In addition, the premiums owed to United at June 30, 2026, were $55 million, which is included in accrued health insurance costs, a current liability, on our Consolidated Balance Sheet.

Previous wording

•Operating results — Our adjusted net income has a significant impact on our operating cash flows. Our adjusted net income decreased 15% to $50 million in the first three months of 2026, compared to $59 million in the first three months of 2025. Please read “Results of Operations.”

Current wording

•Operating results — Our adjusted net income has a significant impact on our operating cash flows. Our adjusted net income decreased 9% to $63 million in the first six months of 2026, compared to $69 million in the first six months of 2025. Please read “Results of Operations.”

Previous wording

Net cash flows used in financing activities were $46 million for the three months ended March 31, 2026. We paid $23 million in dividends and repurchased or withheld $4 million in stock. In addition, client funds liability and other financing activities decreased by $19 million.

Current wording

Net cash used in financing activities was $21 million for the six months ended June 30, 2026. We borrowed $50 million under the Facility for general corporate purposes, paid $46 million in dividends, and withheld $4 million of vested shares to satisfy tax withholding obligations. In addition, client funds liability and other financing activities decreased by $21 million.