CBIZ Inc

Previous wording

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we”, “us”, “our”, "CBIZ" or the "Company" shall mean CBIZ, Inc., a Delaware corporation, and its operating subsidiaries.

Current wording

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we”, “us”, “our”, "CBIZ" or the "Company" shall mean CBIZ, Inc., and its operating subsidiaries.

Previous wording

The following discussion is intended to assist in the understanding of our financial position at June 30, 2024 and December 31, 2023, results of operations for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2023. This discussion and analysis contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in “Item 1A. Risk Factors” included in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

The following discussion is intended to assist in the understanding of our financial position at September 30, 2024 and December 31, 2023, results of operations for the three and nine months ended September 30, 2024 and 2023, and cash flows for the nine months ended September 30, 2024 and 2023, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2023. This discussion and analysis contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in “Item 1A. Risk Factors” included in this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Revenue for the three months ended June 30, 2024 increased by $21.5 million, or 5.4%, to $420.0 million from $398.5 million for the same period in 2023. Same-unit revenue increased by approximately $11.0 million, or 2.8%, as compared to the same period in 2023. Revenue from newly acquired operations contributed $10.5 million, or 2.6%, of incremental revenue for the three months ended June 30, 2024 as compared to the same period in 2023.

Current wording

Revenue for the three months ended September 30, 2024 increased by $28.3 million, or 6.9%, to $438.9 million from $410.5 million for the same period in 2023. Same-unit revenue increased by approximately $20.8 million, or 5.1%, as compared to the same period in 2023. Revenue from newly acquired operations contributed $8.4 million, or 1.9%, of incremental revenue for the three months ended September 30, 2024, as compared to the same period in 2023.

Previous wording

Revenue for the six months ended June 30, 2024 increased by $61.2 million, or 7.2%, to $914.3 million from $853.1 million for the same period in 2023. Same-unit revenue increased by approximately $37.9 million, or 4.4%, as compared to the same period in 2023. Revenue from newly acquired operations contributed $23.3 million, or 2.7%, of incremental revenue for the six months ended June 30, 2024 as compared to the same period in 2023. A detailed discussion of revenue by practice group is included under "Operating Practice Groups".

Current wording

Revenue for the nine months ended September 30, 2024 increased by $89.5 million, or 7.1%, to $1,353.2 million from $1,263.6 million for the same period in 2023. Same-unit revenue increased by approximately $58.7 million, or 4.6%, as compared to the same period in 2023. Revenue from newly acquired operations contributed $31.7 million, or 2.3%, of incremental revenue for the nine months ended September 30, 2024, as compared to the same period in 2023. A detailed discussion of revenue by practice group is included under "Operating Practice Groups."

Previous wording

Net income was $19.8 million, or $0.39 per diluted share, in the second quarter of 2024, compared to $26.9 million, or $0.53 per diluted share, in the second quarter of 2023. For the six months ended June 30, 2024, net income was $96.7 million, or $1.92 per diluted share, compared to $100.0 million, or $1.98 per diluted share, for the same period in 2023. Refer to “Results of Operations" for a detailed discussion of the components of net income.

Current wording

Net income was $35.1 million, or $0.70 per diluted share, in the third quarter of 2024, compared to $33.7 million, or $0.67 per diluted share, in the third quarter of 2023. For the nine months ended September 30, 2024, net income was $131.8 million, or $2.62 per diluted share, compared to $133.7 million, or $2.64 per diluted share, for the same period in 2023. Refer to “Results of Operations" for a detailed discussion of the components of net income.

Previous wording

During the first quarter of 2024, the CBIZ Board of Directors authorized the purchase of up to 5.0 million shares of our common stock under our Share Repurchase Program (the “Share Repurchase Program”), which may be suspended or discontinued at any time and expires on March 31, 2025. The shares may be purchased in the open market, in privately negotiated transactions, and pursuant to Rule 10b5-1 trading plans. Privately negotiated transactions may include purchases from our employees, officers and directors, in accordance with the Securities and Exchange Commission (the “SEC”) rules. CBIZ management will determine the timing and amount of the transactions based on its evaluation of market conditions and other factors.

Current wording

During the first quarter of 2024, the CBIZ Board of Directors authorized the purchase of up to 5.0 million shares of our common stock under our share repurchase program (the “Share Repurchase Program”), which may be suspended or discontinued at any time and expires on March 31, 2025. The shares may be purchased in the open market, in privately negotiated transactions, and pursuant to Rule 10b5-1 trading plans. Privately negotiated transactions may include purchases from our employees, officers and directors, in accordance with the Securities and Exchange Commission (the “SEC”) rules. CBIZ management will determine the timing and amount of the purchases based on its evaluation of market conditions and other factors.

Previous wording

The following tables summarize total revenue for the three and six months ended June 30, 2024 and 2023:

Current wording

The following tables summarize total revenue for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Income and expenses related to the deferred compensation plan for the three and six months ended June 30, 2024 and 2023 are as follows:

Current wording

Income and expenses related to the deferred compensation plan for the three and nine months ended September 30, 2024 and 2023 are as follows:

Previous wording

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three and six months ended June 30, 2024 and 2023 are as follows:

Current wording

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three and nine months ended September 30, 2024 and 2023 are as follows:

Previous wording

The following tables summarize total operating expenses for the three and six months ended June 30, 2024 and 2023:

Current wording

The following tables summarize total operating expenses for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Three months ended June 30, 2024 compared to June 30, 2023. Total operating expenses for the three months ended June 30, 2024 increased by $22.4 million, or 6.5%, to $366.4 million as compared to $344.0 million in the same period of 2023. The deferred compensation plan increased operating expenses by $2.3 million for the three months ended June 30, 2024, and by $5.1 million during the same period in 2023. Excluding the deferred compensation expenses, which were recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $364.1 million and $338.9 million, or 86.7% and 85.0% of revenue, for the three months ended June 30, 2024 and 2023, respectively. In addition, operating expenses for the three months ended June 30, 2024 included approximately $0.2 million non-recurring integration costs associated with the acquisitions completed in 2024, and operating expenses for the three months ended June 30, 2023 included $0.6 million non-recurring integration costs associated with the Somerset CPAs and Advisors ("Somerset") acquisition.

Current wording

Three months ended September 30, 2024 compared to September 30, 2023. Total operating expenses for the three months ended September 30, 2024 increased by $23.8 million, or 7.0%, to $366.0 million as compared to $342.1 million in the same period of 2023. The deferred compensation plan increased operating expenses by $7.3 million for the three months ended September 30, 2024, and decreased by $3.0 million during the same period in 2023. Excluding the deferred compensation expenses, which were recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $358.7 million and $345.2 million, or 81.7% and 84.1% of revenue, for the three months ended September 30, 2024 and 2023, respectively. In addition, operating expenses for the three months ended September 30, 2024 included approximately $0.6 million of non-recurring integration costs associated with the Transaction and other acquisitions completed in 2024, and the operating expenses for the three months ended September 30, 2023 included $0.6 million of non-recurring integration costs associated with the Somerset CPAs and Advisors ("Somerset") acquisition.

Previous wording

The majority of our operating expenses relate to personnel costs, which include (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation, and (iv) stock-based compensation. Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $25.2 million during the three months ended June 30, 2024 as compared to the same period in 2023, driven by $18.1 million higher personnel costs (of which $5.0 million was the result of acquisitions), $2.8 million higher direct costs, $2.1 million higher technology costs, $0.9 million higher professional service costs,$0.6 million higher travel and entertainment costs,$0.4 million higher facility costs, and

Current wording

The majority of our operating expenses relate to personnel costs, which include (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation, and (iv) stock-based compensation. Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $13.5 million during the three months ended September 30, 2024 as compared to the same period in 2023, driven by $7.8 million higher personnel costs (of which $4.7 million was the result of acquisitions), $3.2 million higher direct costs, $1.2 million higher travel and entertainment costs, $0.8 million higher professional service costs, and $0.4 million higher other discretionary spending to support business growth. Personnel costs are discussed in further detail under “Operating Practice Groups” below.

Previous wording

Six months ended June 30, 2024 compared to June 30, 2023. Total operating expenses for the six months ended June 30, 2024 increased by $57.9 million, or 8.4%, to $742.9 million as compared to $685.0 million in the same period of 2023. The deferred compensation plan increased operating expenses by $10.9 million for the six months ended June 30, 2024, and by $9.9 million during the same period in 2023. Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $732.0 million and $675.1 million, or 80.1% and 79.1% of revenue, for the six months ended June 30, 2024 and 2023, respectively, an increase of $56.9 million as compared to the same period in 2023. In addition, operating expense for the six months ended June 30, 2024 included approximately $0.3 million non-recurring integration costs related to the acquisitions completed in 2024, and operating expenses for the six months ended June 30, 2023 included $1.0 million non-recurring integration and retention costs associated with the Somerset acquisition. The increase in operating expense was driven by personnel costs increase of $41.2 million (of which $12.5 million was the result of acquisitions), $4.1 higher direct cost, $3.7 million higher technology costs, $2.7 million higher professional service costs, $2.3 million higher facility costs, $1.9 higher travel and entertainment costs, $0.9 million higher depreciation and amortization expense, and $0.1 million higher other discretionary spending to support business growth. Personnel costs are discussed in further detail under “Operating Practice Groups”.

Current wording

Nine months ended September 30, 2024 compared to September 30, 2023. Total operating expenses for the nine months ended September 30, 2024 increased by $81.7 million, or 8.0%, to $1,108.8 million as compared to $1,027.1 million in the same period of 2023. The deferred compensation plan increased operating expenses by $18.2 million for the nine months ended September 30, 2024, and by $6.9 million during the same period in 2023. Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $1,090.7 million and $1,020.3 million, or 80.6% and 80.7% of revenue, for the nine months ended September 30, 2024 and 2023, respectively, an increase of $70.4 million as compared to the same period in 2023. In addition, operating expense for the nine months ended September 30, 2024 included approximately $0.9 million of non-recurring integration costs related to the Transaction and other acquisitions completed in 2024, and operating expenses for the nine months ended September 30, 2023 included $1.5 million of non-recurring integration and retention costs associated with the Somerset acquisition. The increase in operating expense was driven by higher personnel costs of $49.0 million (of which $17.2 million was the result of acquisitions), $7.3 higher direct cost, $4.2 million higher technology costs, $3.4 million higher professional service costs, $3.2 million higher travel and entertainment costs, $1.2 higher depreciation and amortization expense, $1.1 million higher bad debt expense, and $0.9 million higher other discretionary spending to support business growth. Personnel costs are discussed in further detail under “Operating Practice Groups” below.

Previous wording

Three months ended June 30, 2024 compared to June 30, 2023. The deferred compensation plan increased G&A expenses by $0.3 million for the three months ended June 30, 2024, and increased G&A expenses by $0.6 million during the same period in 2023. G&A expenses, excluding the impact of the deferred compensation plan, would have been $21.7 million, or 5.2% of revenue, for the three months ended June 30, 2024, compared to $15.2 million, or 3.8% of revenue, for the same period in 2023, an increase of approximately $6.6 million. The increase was primarily driven by $5.6 million higher legal and other professional services costs largely associated with the announced Transaction, $0.4 millon higher travel and entertainment costs, $0.4 million higher technology costs, $0.2 million higher depreciation costs, and $0.7 million higher other discretionary spending to support the business growth. The increase in G&A expenses was partially offset by$0.7 million lower personnel costs and $0.1 million lower facilitiy related costs. G&A expense for the three months ended June 30, 2024 included approximately $0.1 million of non-recurring transaction and integration costs associated with the acquisitions completed in 2024, and G&A expense for the three months ended June 30, 2023 included approximately $0.3 million of non-recurring transaction and integration costs associated with the Somerset acquisition.

Current wording

Nine months ended September 30, 2024 compared to September 30, 2023. The deferred compensation plan increased G&A expenses by $2.4 million for the nine months ended September 30, 2024, and increased G&A expenses by $0.8 million during the same period in 2023. The G&A expenses, excluding the impact of the deferred compensation plan, would have been $61.5 million, or 4.5% of revenue, for the nine months ended September 30, 2024, compared to $43.7 million, or 3.5% of revenue, for the same period in 2023, an increase of approximately $17.8 million. The increase in G&A expenses was primarily driven by $14.8 million higher legal and other professional services costs largely associated with the Transaction, $2.3 millon higher other discretionary spending to support business growth, $0.4 million higher depreciation costs, and $0.3 million higher travel and entertainment costs. In addition, G&A expenses for the nine months ended September 30, 2024 included $15.0 million of non-recurring transaction and integration costs primarily related to the Transaction. The G&A expenses for the nine months ended September 30, 2023 included $1.5 million of non-recurring transaction and integration costs related to the Somerset acquisition.

Previous wording

Three and six months ended June 30, 2024 compared with June 30, 2023. During the three months ended June 30, 2024, our average debt balance and weighted average effective interest rate was $410.1 million and 4.85%, respectively, compared to $403.1 million and 5.24% for the same period of 2023. The increase in interest expense for the three months ended June 30, 2024 as compared to the same period in 2023 was primarily driven by a higher average debt balance.

Current wording

Three and nine months ended September 30, 2024 compared with September 30, 2023. During the three months ended September 30, 2024, our average debt balance and weighted average effective interest rate were $350.7 million and 5.37%, respectively, compared to $398.3 million and 5.53% for the same period of 2023. The decrease in interest expense for the three months ended September 30, 2024 as compared to the same period in 2023 was primarily driven by a lower interest rates and lower average debt balance.

Previous wording

During the six months ended June 30, 2024, our average debt balance and interest rate was $367.9 million and 5.41% compared to $352.9 million and 4.94% for the same period of 2023. The increase in interest expense for the six months ended June 30, 2024 as compared to the same period in 2023 was primarily driven by a higher average debt balance as well as a higher weighted average effective interest rate.

Current wording

During the nine months ended September 30, 2024, our average debt balance and interest rate were $362.1 million and 5.40%, respectively, compared to $368.2 million and 5.16% for the same period of 2023. The increase in interest expense for the nine months ended September 30, 2024 as compared to the same period in 2023 was primarily driven by a higher weighted average effective interest rate.

Previous wording

Three and six months ended June 30, 2024 compared with June 30, 2023. For the three months ended June 30, 2024, other income, net includes a net gain of $2.6 million associated with the deferred compensation plan. For the same period in 2023, other income, net includes a net gain of $5.7 million associated with the deferred compensation plan. Excluding the impact of the deferred compensation plan, the decrease in other income, net for the three months ended June 30, 2024 was not material as compared to the same period in 2023.

Current wording

Three and nine months ended September 30, 2024 compared with September 30, 2023. For the three months ended September 30, 2024, other income (expense), net includes a net gain of $8.4 million associated with the deferred compensation plan. For the same period in 2023, other income (expense), net includes a net loss of $3.5 million associated with the deferred compensation plan. Excluding the impact of the deferred compensation plan from other income (expense), net would result in a decrease of $8.2 million for the three months ended September 30, 2024 compared to the same period in 2023. The decrease is primarily due to higher expense related to contingent consideration fair value adjustments of $5.1 million, as a result of assuming $5.3 million contingent purchase price liabilities from CBIZ CPAs P.C., and higher other expenses of $1.7 million. In addition, we recorded $1.4 million of gains from the sale of certain assets in 2023 which did not recur in 2024.

Previous wording

Three and six months ended June 30, 2024 compared with June 30, 2023. The effective tax rate for the three months ended June 30, 2024 was 29.8%, compared to an effective tax rate of 30.4% for the comparable period in 2023. The decrease in the effective tax rate for the three month period ending June 30, 2024 was primarily due to the tax effect of lower non-deductible expenses and lower state tax expenses relative to pre-tax income during the second quarter of 2024 as compared to the same period in 2023.

Current wording

Three and nine months ended September 30, 2024 compared with September 30, 2023. The effective tax rate for the three months ended September 30, 2024 was 31.2%, compared to an effective tax rate of 28.6% for the comparable period in 2023. The increase in the effective tax rate for the three month period ended September 30, 2024 was primarily due to a lower tax benefit recognized related to stock-based compensation expense during the third quarter of 2024 compared to the same period in 2023, which adversely affected the effective tax rate as related to pre-tax income.

Previous wording

The effective tax rate for the six months ended June 30, 2024 was 26.9%, compared to an effective tax rate of 27.6% for the same period in 2023. The decrease in the effective tax rate for the six month period ending June 30, 2024 was primarily due to the tax effect of lower non-deductible expenses and lower state tax expenses relative to pre-tax income during the six months ended June 30, 2024 as compared to the same period in 2023.

Current wording

The effective tax rate for the nine months ended September 30, 2024 was 28.1%, compared to an effective tax rate of 27.9% for the same period in 2023. The slight increase in the effective tax rate for the nine month period ended September 30, 2024 was primarily due to a lower tax benefit recognized related to stock-based compensation expense during the third quarter of 2024 compared to the same period in 2023, which adversely affected the effective tax rate as related to pre-tax income. This increase in the effective tax rate was partially offset by the tax effect of lower non-deductible expenses and lower state expenses during the nine months ended September 30, 2024 as compared to the same period in 2023.

Previous wording

The Financial Services practice group revenue for the three months ended June 30, 2024 grew by 6.3% to $309.2 million from $290.9 million during the same period in 2023. Same-unit revenue grew by $8.8 million, or 3.0%, primarily driven by those units that provide government healthcare compliance business consulting, which increased by $8.3 million, and those units that provide project based advisory services, which increased by approximately$2.2 million. The increase was offset by a decrease in revenue of approximately $1.7 million from those units that provide traditional accounting and tax-related services for the three months ended June 30, 2024.The impact of acquired businesses contributed $9.5 million, or 3.1%, of 2024 revenue.

Current wording

The Financial Services practice group revenue for the three months ended September 30, 2024 grew by 8.0% to $322.3 million from $298.4 million during the same period in 2023. Same-unit revenue grew by $15.5 million, or 5.2%, primarily driven by those units that provide traditional accounting and tax-related services, which increased by $8.5 million, the units that provide advisory services, which increased by approximately$4.3 million, and the units that provide government healthcare compliance business consulting, which increased by approximately $2.7 million. The impact of acquired businesses contributed $8.4 million, or 2.6%, of 2024 revenue.

Previous wording

We provide a range of services to affiliated CPA firms under joint referral and administrative service agreements (“ASAs”). Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $68.9 million and $65.9 million for the three months ended June 30, 2024 and 2023, respectively.

Current wording

We provide a range of services to affiliated CPA firms under joint referral and administrative service agreements (“ASAs”). Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $60.9 million and $60.5 million for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Operating expenses increased by $19.4 million, or 8.0%, as compared to the same period last year. Personnel costs increased by $12.9 million, of which acquisitions contributed approximately $4.6 million to the increase. Compared to the same period in 2023, direct costs, technology costs, professional services costs, travel and entertainment costs, corporate allocated costs, facility costs, depreciation and amortization costs, and employee gifts and activities increased by approximately$2.6 million, $1.4 million, $0.8 million, $0.6 million, $0.4 million, $0.4 million, $0.2 million, and $0.1 million, respectively. Other discretionary costs, net increased by approximately $1.5 million. Operating expenses as a percentage of revenue increased slightly to 85.0% for the three months ended June 30, 2024 from 83.7% of revenue for the prior year quarter.

Current wording

Operating expenses increased by $11.0 million, or 4.4%, as compared to the same period last year. Personnel costs increased by $5.6 million, of which acquisitions contributed approximately $4.7 million to the increase. Compared to the same period in 2023, direct costs, professional services costs, and facility costs increased by approximately$4.2 million, $0.8 million, and $0.4 million, respectively. Operating expenses as a percentage of revenue decreased slightly to 80.9% for the three months ended September 30, 2024 from 83.7% of revenue for the prior year quarter.

Previous wording

Revenue for the six months ended June 30, 2024 grew by 7.5% to $681.9 million from $634.0 million during the same period in 2023. Same-unit revenue grew by $26.2 million, or 4.1%, across almost all service lines, primarily driven by those units that provide government healthcare compliance business consulting, which increased by $13.0 million, the units that provide traditional accounting and tax-related services, which increased $9.0 million, and bythose units that provide project-oriented advisory services, which increased by approximately$4.2 million.The impact of acquired businesses contributed a total of $21.6 million, or 3%, of Financial Services practice group's revenue for the six months ended June 30, 2024.

Current wording

Revenue for the nine months ended September 30, 2024 grew by 7.7% to $1,004.2 million from $932.4 million during the same period in 2023. Same-unit revenue grew by $41.7 million, or 4.5%, across almost all service lines, primarily driven by the units that provide traditional accounting and tax-related services, which increased $17.5 million, theunits that provide government healthcare compliance business consulting, which increased by $15.6 million, and the units that provide advisory services, which increased by approximately$8.6 million. The impact of acquired businesses contributed a total of $30.0 million, or 3.0%, of Financial Services practice group's revenue for the nine months ended September 30, 2024.

Previous wording

Fees earned under the ASAs, as described above, were approximately $156.8 million and $150.7 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Fees earned under the ASAs, as described above, were approximately $217.7 million and $211.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Operating expenses increased by $40.5 million, or 8.3%, as compared to the same period last year. Personnel costs increased by $27.0 million, of which acquisitions contributed approximately $11.6 million to the increase. Compared to the same period in 2023, direct costs, technology costs, facility costs, professional services costs, travel and entertainment costs, corporate allocated costs, depreciation and amortization costs, bad debt, and marketing costs increased by approximately $4.2 million, $2.2 million, $2.1 million, $1.9 million, $1.2 million, $1 million, $0.8 million, $0.3 million, and $0.3 million respectively. Other discretionary costs, net increased by approximately $1.5 million. Operating expense as a percentage of revenue increased to 77.5% during the six months ended June 30, 2024 from 77.0% of revenue during the same period in 2023.

Current wording

Operating expenses increased by $51.4 million, or 7.0%, as compared to the same period last year. Personnel costs increased by $32.1 million, of which acquisitions contributed approximately $10.9 million to the increase. Compared to the same period in 2023, direct costs, professional services costs, facility costs, technology costs, corporate allocated costs, depreciation and amortization costs, and bad debt increased by approximately $8.3 million, $2.7 million, $2.5 million, $2.3 million, $1.4 million, $1.2 million, and $0.7 million, respectively. Other discretionary costs, net, increased by approximately $0.2 million. Operating expense as a percentage of revenue decreased to 78.6% during the nine months ended September 30, 2024 from 79.1% of revenue during the same period in 2023.

Previous wording

The Benefits and Insurance Services practice group revenue increased by $1.6 million, or 1.6%, to $97.4 million during the three months ended June 30, 2024 compared to $95.8 million for the same period in 2023. Same-unit revenue grew by $0.6 million, or 0.7%, primarily driven by a $3.2 million increase in the employee benefit and retirement benefit services lines, and a$0.5 million increase in the payroll-related services, partially offset by a$2.2 million decrease in property and casualty services. During the three months ended June 30, 2024, property and casualty service line experienced the departure of a small group of producers and support staff and a loss of clients served by this group, which contributed to the $2.2 million decrease in revenue generated by the property and casualty services.

Current wording

The Benefits and Insurance Services practice group revenue increased by $3.8 million, or 3.7%, to $104.0 million during the three months ended September 30, 2024 compared to $100.3 million for the same period in 2023. Same-unit revenue grew by $3.8 million, or 3.7%, across almost all of the major service lines, primarily driven by a $2.9 million increase in the employee benefit and retirement benefit services lines, a$0.6 million increase in the property and casualty services, and a $0.7 million increase in payroll-related services. The increase was offset by a $0.4 million decrease in project based services revenue.

Previous wording

Operating expenses increased by $4.9 million, or 6.2%, when compared to the same period last year. Personnel costs increased by $3.9 million, of which acquisitions contributed approximately $0.5 million, primarily due to the impact of annual merit increases as well as investment in producers. Compared to the same period in 2023, technology costs and bad debt costs increased by approximately $0.4 million and $0.3 million, respectively, and was partially offset by $0.1 million lower travel and entertainment costs as compared to the same period in 2023. Operating expenses as a percentage of revenue increased to 85.4% for the quarter ended June 30, 2024 from 81.8% of revenue for the same period in 2023, primarily due to decrease in revenue generated from the property and casualty services.

Current wording

Operating expenses increased by $3.3 million, or 4.2%, when compared to the same period last year. Personnel costs increased by $2.1 million, primarily due to the impact of annual merit increases as well as investment in client service personnel. Compared to the same period in 2023, travel and entertainment costs, direct costs, technology costs, and bad debt increased by approximately $0.6 million, $0.3 million, $0.2 million, and $0.1 million, respectively. Operating expenses as a percentage of revenue increased to 79.7% for the quarter ended September 30, 2024 from 79.4% of revenue for the same period in 2023, primarily due to decrease in revenue generated from the property and casualty services.

Previous wording

The Benefits and Insurance Services practice group revenue increased by $9.9 million, or 5.1%, to $205.8 million, during the six months ended June 30, 2024 compared to $195.9 million for the same period in 2023. Same-unit revenue grew by $8.2 million, or 4.2%, across almost all of the major service lines, primarily driven by a $7.7 million increase in employee benefit and retirement benefit services lines, a $1.2 million increase in payroll related services, and a $0.5 million increase in the property and casualty services, partially offset by an approximately$1.0 million decrease in other project based services.

Current wording

The Benefits and Insurance Services practice group revenue increased by $13.7 million, or 4.6%, to $309.9 million, during the nine months ended September 30, 2024 compared to $296.2 million for the same period in 2023. Same-unit revenue grew by $12.0 million, or 4.0%, across almost all of the major service lines, primarily driven by a $10.6 million increase in employee benefit and retirement benefit services lines, a $2.0 million increase in payroll related services, and a $1.0 million increase in the property and casualty services, partially offset by an approximately$1.2 million decrease in other project based services.

Previous wording

Operating expenses increased by $11.6 million, or 7.5%, when compared to the same period last year. Personnel cost increased by $9.9 million primarily due to timing of annual merit increases, bonus accrual, as well as investment in producers. Compared to the same period in 2023, technology costs, direct costs, bad debt costs, as well as facility costs increased by approximately$0.6 million, $0.3 million, $0.2 million, and $0.2 million, respectively. Operating expense as a percentage of revenue slightly increased to 81.1% during the six months ended June 30, 2024 from 79.3% of revenue for the same period in 2023.

Current wording

Operating expenses increased by $14.9 million, or 6.3%, when compared to the same period last year. Personnel cost increased by $12.0 million primarily due to timing of annual merit increases, bonus accrual, as well as investment in client service personnel. Compared to the same period in 2023, technology costs, direct costs, travel and entertainment costs, facility costs, as well as professional service costs increased by approximately$0.8 million, $0.6 million, $0.5 million, $0.4 million, and $0.4 million, respectively. Other discretionary costs, net increased by approximately $0.2 million. Operating expense as a percentage of revenue slightly increased to 80.6% during the nine months ended September 30, 2024 from 79.3% of revenue for the same period in 2023.

Previous wording

The National Practices group is primarily driven by a cost-plus contract with a single client, which has existed since 1999. The cost-plus contract is a five-year contract with the most recent renewal through December 31, 2028. Revenues from this single client accounted for approximately 75% of the National Practice group’s revenue. During the three and six months ended June 30, 2024, revenue increased by $1.6 million, or 13.9%, and $3.4 million, or 14.7%, respectively, while operating expenses increased by $1.5 million, or 14.1%, and $2.8 million, or 13.4%, respectively.

Current wording

The National Practices group is primarily driven by a cost-plus contract with a single client, which has existed since 1999. The cost-plus contract is a five-year contract with the most recent renewal through December 31, 2028. Revenues from this single client accounted for approximately 75% of the National Practice group’s revenue. During the three and nine months ended September 30, 2024, revenue increased by $1.5 million, or 14.0%, and $5.0 million, or 14.5%, respectively, while operating expenses increased by $0.4 million, or 4.1%, and $3.3 million, or 10.3%, respectively.

Previous wording

Total operating expenses decreased by $3.3 million during the three months ended June 30, 2024, as compared to the same period in 2023. The deferred compensation plan increased operating expenses by $2.3 million for the three months ended June 30, 2024 and by $5.1 million during the same period in 2023. Excluding the deferred compensation expenses, operating expenses decreased by$0.5 million during the three months ended June 30, 2024, as compared to the same period in 2023. The decrease was primarily driven by lower marketing as well as facility related costs.

Current wording

Total operating expenses increased by $9.1 million during the three months ended September 30, 2024, as compared to the same period in 2023. The deferred compensation plan increased operating expenses by $7.3 million for the three months ended September 30, 2024 and decreased operating expenses by $3.0 million during the same period in 2023. Excluding the deferred compensation expenses, operating expenses decreased by $1.1 million during the three months ended September 30, 2024, as compared to the same period in 2023. The decrease was primarily driven by lower marketing as well as facility related costs.

Previous wording

Total corporate general and administrative expenses increased by $6.3 million, or 39.6%, during the three months ended June 30, 2024, as compared to the same period in 2023. The deferred compensation plan increased corporate general and administrative expenses by $0.3 million for the three months ended June 30, 2024 and by $0.6 million during the same period in 2023. Excluding the deferred compensation expenses, corporate general and administrative expense increased by approximately $6.6 million. The increase was primarily driven by $5.6 million higher legal and other professional services costs largely associated with the announced Transaction, $0.4 millon higher travel and entertainment costs, $0.4 million higher technology costs, $0.2 million higher depreciation costs, and $0.7 million higher other discretionary spending to support the business growth. The increase in G&A expenses was partially offset by$0.7 million lower personnel costs and $0.1 million lower facility related costs. G&A expense for the three months ended June 30, 2024 included approximately $0.1 million non-recurring transaction and integration costs associated with the acquisitions completed in 2024, and G&A expense for the three months ended June 30, 2023 included approximately $0.3 million non-recurring transaction and integration costs associated with the Somerset acquisition.

Current wording

Total corporate general and administrative expenses increased by $10.1 million, or 76.8%, during the three months ended September 30, 2024, as compared to the same period in 2023. The deferred compensation plan increased corporate general and administrative expenses by $1.1 million for the three months ended September 30, 2024 and decreased corporate general and administrative expenses by $0.5 million during the same period in 2023. Excluding the deferred compensation expenses, corporate general and administrative expense increased by approximately $8.6 million during the three months ended September 30, 2024, as compared to the same period in 2023. The increase was primarily driven by $6.9 million higher legal and other professional services costs largely associated with the Transaction, $1.3 million higher other discretionary spending to support business growth, and $0.4 million higher personnel costs. G&A expenses for the three months ended September 30, 2024 included approximately $7.7 million of non-recurring transaction and integration costs primarily associated with the Transaction. For the three months ended September 30, 2023, there were no non-recurring transaction and integration costs associated with acquisitions.

Previous wording

Total other expense, net increased by $3.1 million during the three months ended June 30, 2024, as compared to the same period in 2023. For the three months ended June 30, 2024, total other expense, net includes a net gain of $2.6 million associated with the deferred compensation plan. For the same period in 2023, total other expense, net includes a net gain of $5.7 million associated with the deferred compensation plan. Excluding the impact of the deferred compensation plan, total other expense, net would have been $6.2 million in 2024 and $6.2 million in 2023, relatively unchanged.

Current wording

Total other income (expense), net increased by $6.2 million during the three months ended September 30, 2024, as compared to the same period in 2023. For the three months ended September 30, 2024, total other expense, net includes a net gain of $8.4 million associated with the deferred compensation plan. For the same period in 2023, total other expense, net includes a net loss of $3.5 million associated with the deferred compensation plan. Excluding the impact of the deferred compensation plan, total other income (expense), net decreased by $5.6 million, primarily due to higher expense related to contingent consideration fair value adjustments of $5.1 million, as a result of assuming $5.3 million contingent purchase price liabilities from CBIZ CPAs P.C., and $1.3 million higher other expenses, and partially offset by a decrease of $0.8 million in interest expense.

Previous wording

Total operating expenses increased by $3.0 million, or 14.3%, during the six months ended June 30, 2024, as compared to the same period in 2023. The deferred compensation plan increased operating expenses by $10.9 million for the six months ended June 30, 2024, and by $9.9 million during the same period in 2023. Excluding the deferred compensation expenses, operating expense increase by approximately$2.0 million during thesix months ended June 30, 2024, primarily driven by higher personnel related costs, as compared to the same period in 2023.

Current wording

Total operating expenses increased by $12.1 million, or 52.8%, during the nine months ended September 30, 2024, as compared to the same period in 2023. The deferred compensation plan increased operating expenses by $18.2 million for the nine months ended September 30, 2024, and by $6.9 million during the same period in 2023. Excluding the deferred compensation expenses, operating expense increased by approximately $0.8 million during thenine months ended September 30, 2024, primarily driven by higher personnel related costs, as compared to the same period in 2023.

Previous wording

Total G&A expenses increased by $9.4 million, or 29.8%, during the six months ended June 30, 2024, as compared to the same period in 2023. The deferred compensation plan increased G&A expenses by $1.4 million for the six months ended June 30, 2024, and by $1.3 million during the same period in 2023. Excluding the deferred compensation expenses, G&A expense increased by approximately $9.3 million during thesix months ended June 30, 2024, compared to the same period in 2023. The increase in G&A expenses was primarily driven by $7.8 million higher legal and other professional services costs largely associated with the announced Transaction, $0.4 million higher travel and entertainment costs, $0.3 million higher technology costs, $0.3 million higher depreciation costs, and $1.0 million higher other discretionary spending to support the business growth. The increase in G&A expenses was partially offset by $0.5 million lower personnel costs and $0.1 million lower facility related costs. In addition, G&A expense for the six months ended June 30, 2024 included a $0.6 million non-recurring transaction and integration costs related to the acquisitions completed in 2024. G&A expense for the six months ended June 30, 2023 included a $1.5 million non-recurring transaction and integration costs related to the Somerset acquisition.

Current wording

Total G&A expenses increased by $19.5 million, or 43.7%, during the nine months ended September 30, 2024, as compared to the same period in 2023. The deferred compensation plan increased G&A expenses by $2.4 million for the nine months ended September 30, 2024, and by $0.8 million during the same period in 2023. Excluding the deferred compensation expenses, G&A expenses increased by approximately $17.8 million during thenine months ended September 30, 2024, compared to the same period in 2023. The increase in G&A expenses was primarily driven by $14.8 million higher legal and other professional services costs largely associated with the Transaction, $2.3 millon higher other discretionary spending to support business growth, $0.4 million higher depreciation costs, and $0.3 million higher travel and entertainment costs. In addition, G&A expenses for the nine months ended September 30, 2024 included $15.0 million of non-recurring transaction and integration costs primarily related to the Transaction. G&A expenses for the nine months ended September 30, 2023 included $1.5 million of non-recurring transaction and integration costs related to the Somerset acquisition.

Previous wording

Total other income, net increased by $0.7 million during the six months ended June 30, 2024, as compared to the same period in 2023. Total other income, net for the six months ended June 30, 2024 includes a net gain of $12.2 million associated with the deferred compensation plan. For the same period in 2023, total other income, net includes a net gain of $11.1 million associated with the deferred compensation plan. Excluding the impact of the deferred compensation plan, total other income, net decreased by $0.4 million, primarily due to $1.2 million higher interest expense due to higher average outstanding balance and interest rates during 2024 as compared to 2023, offset by $0.8 million lower net changes in the fair value of contingent consideration related to prior acquisitions.

Current wording

Total other income (expense), net increased by $6.9 million during the nine months ended September 30, 2024, as compared to the same period in 2023. Total other income (expense), net for the nine months ended September 30, 2024 includes a net gain of $20.6 million associated with the deferred compensation plan. For the same period in 2023, total other income, net includes a net gain of $7.7 million associated with the deferred compensation plan. Excluding the impact of the deferred compensation plan, total other income (expense), net decreased by $6.0 million, primarily due to higher expense related to contingent consideration fair value adjustments of $4.3 million, as a result of assuming $5.3 million contingent purchase price liabilities from CBIZ CPAs P.C., $1.4 million higher other expenses, and $0.3 million higher interest expense.

Previous wording

Accounts receivable balances increase in response to the first six months' revenue generated by the Financial Services practice group. A significant amount of this revenue is billed and collected in subsequent quarters. Days sales outstanding (“DSO”) represent accounts receivable and unbilled revenue (net of realization adjustments) at the end of the period, divided by trailing twelve months' daily revenue. We provide DSO data because such data is commonly used as a performance measure by analysts and investors and as a measure of our ability to collect on receivables in a timely manner. Trailing-twelve-month DSO, including the impact of acquisitions, was 95 days and 94 days at June 30, 2024 and 2023, respectively. DSO at December 31, 2023 was 78 days.

Current wording

Accounts receivable balances increase in response to the first nine months' revenue generated by the Financial Services practice group. A significant amount of this revenue is billed and collected in subsequent quarters. Days sales outstanding (“DSO”) represent accounts receivable and unbilled revenue (net of realization adjustments) at the end of the period, divided by trailing twelve months' daily revenue. We provide DSO data because such data is commonly used as a performance measure by analysts and investors and as a measure of our ability to collect on receivables in a timely manner. Trailing-twelve-month DSO, including the impact of acquisitions, was 97 days and 96 days at September 30, 2024 and 2023, respectively. DSO at December 31, 2023 was 78 days.

Previous wording

Operating Activities -Cash provided by operating activities was $24.4 million during the six months ended June 30, 2024, primarily consisted of working capital use of $101.5 million, which was offset by net income of $96.7 million and certain non-cash items, such as depreciation and amortization expense of $19.0 million, deferred income tax of $3.1 million, and stock-based compensation expense of $5.0 million. Cash provided by operating activities was $29.7 million during the six months ended June 30, 2023 and primarily consisted of net income of $100.0 million and certain non-cash items, such as depreciation and amortization expense of $17.8 million, deferred income tax of $4.6 million, and stock-based compensation expense of $6.6 million. The cash inflow was offset by working capital use of $101.6 million during the six months ended June 30, 2023.

Current wording

Operating Activities -Cash provided by operating activities was $68.2 million during the nine months ended September 30, 2024, primarily consisted of working capital use of $108.4 million, which was offset by net income of $131.8 million and certain non-cash items, such as depreciation and amortization expense of $28.6 million, deferred income tax of $4.8 million, stock-based compensation expense of $7.4 million, and an adjustment to contingent earnout liability of $6.3 million. Cash provided by operating activities was $57.3 million during the nine months ended September 30, 2023 and primarily consisted of net income of $133.7 million and certain non-cash items, such as depreciation and amortization expense of $27.0 million, deferred income tax of $6.7 million, and stock-based compensation expense of $9.7 million. The cash inflow was offset by working capital use of $121.6 million during the nine months ended September 30, 2023.

Previous wording

Investing Activities -Cash used in investing activities during the six months ended June 30, 2024 was $33.2 million and consisted primarily of $22.5 million used for business acquisitions, $7.0 million in capital expenditures, and $3.8 million in other investing activities primarily related to acquistion related working capital adjustment payments and notes receivable. The net cash flow related to funds held for clients and other activities were immaterial. Cash used in investing activities during the three months ended June 30, 2023 was $65.6 million and consisted primarily of $48.6 million used for business acquisitions, $11.7 million in capital expenditures, and $9.0 million in other investing activities primarily related to working capital payments and notes receivable. During the six months ended June 30, 2023, the use of cash was offset by $3.7 million net cash inflow related to funds held for clients and other activities.

Current wording

Investing Activities -Cash used in investing activities during the nine months ended September 30, 2024 was $24.9 million and consisted primarily of $22.9 million used for business acquisitions, $9.7 million in capital expenditures, and $2.2 million in other investing activities primarily related to acquistion related working capital adjustment payments and notes receivable. The net cash flow related to funds held for clients and other activities were immaterial. Cash used in investing activities during the nine months ended September 30, 2023 was $76.6 million and consisted primarily of $53.1 million used for business acquisitions, $19.0 million in capital expenditures, and $11.4 million in other investing activities primarily related to working capital payments and notes receivable. During the nine months ended September 30, 2023, the use of cash was offset by $5.2 million net cash inflow related to funds held for clients and other activities, $1.5 million related to the sale of one technology asset and $0.2 million in other cash payments related to certain prior divestitures.

Previous wording

Financing Activities -Cash used in financing activities during the six months ended June 30, 2024 was $11.9 million and primarily consisted of $68.6 million in net proceeds from the credit facility, partially offset by $11.2 million cash used in share repurchases for tax withholding purposes, a $28.3 million net decrease in client fund obligations and $41.0 million in contingent consideration payments related to prior acquisitions. Cash provided by financing activities during the six months ended June 30, 2023 was $21.8 million and primarily consisted of $144.9 million in net proceeds from the credit facility and $4.3 million proceeds from exercise of stock options, partially offset by $57.0 million in share repurchases, a $40.4 million net decrease in client fund obligations and $30.0 million in contingent consideration payments related to prior acquisitions.

Current wording

Financing Activities -Cash used in financing activities during the nine months ended September 30, 2024 was $85.2 million and primarily consisted of $24.9 million in net proceeds from the credit facility, partially offset by $11.4 million cash used in share repurchases for tax withholding purposes, a $47.6 million net decrease in client fund obligations and $50.9 million in contingent consideration payments related to prior acquisitions. Cash used in financing activities during the nine months ended September 30, 2023 was $18.4 million and primarily consisted of $66.2 million in share repurchases, a $49.6 million net decrease in client fund obligations and $40.1 million in contingent consideration payments related to prior acquisitions. The use of cash was partially offset by $129.0 million in net proceeds from the credit facility and $8.4 million in proceeds from the exercise of stock options.