Company: NSP
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0001000753-25-000023
Chunk: 8

Company: INSPERITY, INC.
Filing Date: 2025-04-29
Form: 10-Q
Item: Item 8
Chunk 8
---
 to the “practical expedients” provided under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers, we expense sales commissions when incurred because the terms of our contracts are cancellable by either party with a 30-day notice. These costs are recorded in commissions in our Consolidated Statements of Income.

Insperity | 2025 First Quarter Form 10-Q12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our revenue for our PEO HR Outsourcing Solutions by geographic region and for our other products and services offerings are as follows:Three Months Ended March 31,(in millions)20252024% ChangeNortheast$526 $509 3 %Southeast257 246 4 %Central335 324 3 %Southwest347 340 2 %West377 366 3 %1,842 1,785 3 %Other revenue21 17 24 %Total revenue$1,863 $1,802 3 %Our PEO HR Outsourcing Solutions revenues are primarily derived from our gross billings, which are based on (1) the payroll cost of our WSEEs; and (2) a markup computed as a percentage of the payroll cost. The gross billings are invoiced concurrently with each periodic payroll of our WSEEs. Revenues, which exclude the payroll cost component of gross billings and therefore consist solely of the markup, are recognized ratably over the payroll period as WSEEs perform their service at the client worksite.In determining the pricing of the markup component of our gross billings, we take into consideration our estimates of the costs directly associated with our WSEEs, including payroll taxes, benefits and workers’ compensation costs, plus an acceptable gross profit margin. As a result, our operating results are significantly impacted by our ability to accurately estimate our direct costs relative to the revenues derived from the markup component of our gross billings.Revenues are comprised of gross billings less WSEE payroll costs as follows:Three Months Ended March 31,(in millions)20252024Gross billings$12,144 $11,483 Less: WSEE payroll cost10,281 9,681 Revenues$1,863 $1,802 

Consistent with our revenue recognition policy, our direct costs do not include the payroll cost of our WSEEs. Our direct costs associated with our revenue generating activities are primarily comprised of all other costs related