Insperity, Inc. (NYSE:NSP) Q3 2023 Results Conference Call October 31, 2023 8:30 AM ET

Company Participants

Douglas Sharp - Executive VP of Finance, CFO and Treasurer

Paul Sarvadi - Co-Founder, Chairman and CEO

Conference Call Participants

Andrew Nicholas - William Blair

Mark Marcon - Baird

Tobey Sommer - Truist Securities

Jeff Martin - ROTH MKM

Operator

Good morning. My name is Jenny, and I will be your conference operator today. I would like to welcome everyone to the Insperity Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note this conference is being recorded.

At this time, I would like to introduce today's speakers. Joining us are Paul Sarvadi, Chairman of the Board and Chief Executive Officer; and Douglas Sharp, Executive Vice President of Finance, Chief Financial Officer and Treasurer.

At this time, I'd like to turn the call over to Douglas Sharp. Mr. Sharp, please go ahead.

Douglas Sharp

Thank you. We appreciate you joining us. Let me begin by outlining our plan for this morning's call. First, I'm going to discuss the details behind our third quarter 2023 financial results. Paul will then comment on the quarter and our plan over the remainder of the year. I will return to provide our financial guidance for the fourth quarter and an update to the full year guidance. We will then end the call with a question-and-answer session.

Now before I begin, I would like to remind you that Mr. Sarvadi or I -- they may make forward-looking statements during today's call, which are subject to risks, uncertainties and assumptions. In addition, some of our discussion may include non-GAAP financial measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements and reconciliations of non-GAAP financial measures, please see the company's public filings, including the Form 8-K filed today, which are available on our website.

Now let's discuss our third quarter 2023 financial results in which we significantly exceeded our earnings expectations. Continued work on employee growth, combined with strong pricing, favorable direct cost trends and effective management of operating costs resulted in a 19% increase in Q3 adjusted EPS to $1.46 and an 18% increase in adjusted EBITDA to $94 million. As for our growth metric, the average number of paid worksite employees increased by 4% over Q3 of 2022, in spite of a continued slowdown in hiring by our client base in a more challenging sales environment. Client retention remains strong, averaging 99% for the quarter.