Insperity, Inc. (NYSE:NSP) Q1 2024 Earnings Conference Call May 1, 2024 8:30 AM ET

Company Participants

Paul Sarvadi - Chairman and CEO
Douglas Sharp - EVP-Finance, CFO and Treasurer

Conference Call Participants

Andrew Nicholas - William Blair
Tobey Sommer - Truist
Jeff Martin - ROTH MKM
Andre Childress - Baird & Company

Operator

Good morning. My name is Jenny and I will be your conference operator today. I would like to welcome everyone to the Insperity First Quarter 2024 Earnings Conference Call. [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 first quarter 2024 financial results. Paul will then comment on our recent accomplishments, including the progress we have made in implementing our Workday strategic partnership solution. I will return to provide our financial guidance for the second quarter and an update to the full year guidance. We will then end the call with a question-and-answer session.

Now, before we begin, I would like to remind you that Mr. Sarvadi or I 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 first quarter results in which we reported earnings above the high end of our guidance. We reported Q1 adjusted EBITDA of $142 million and adjusted earnings per share of $2.27. These results reflect the average number of paid worksite employees within the range of our forecast, continued strong pricing, lower than expected benefit costs and operating expenses in line with our budget.

As for our growth metric, the average number of paid worksite employees in Q1 was approximately 304,000, a decline of less than 1% when compared to Q1 of 2023. As you may recall from our prior earnings call, this slight decline was expected due to net layoffs incurred in our client base over the second half of 2023 into January of 2024, and the loss of a handful of large accounts during our year-end transition. Additionally, we experienced a 42% decline in net hiring in our client base in Q1 of 2024 when compared to the first quarter of 2023. Worksite employees paid from sales was at a similar level compared to Q1 2023 and when combined with client retention, came in at forecasted levels.