Company: NSP
Filing Date: 2025-08-01
Form Type: 10-Q
Source: 0001000753-25-000069
Chunk: 20

Company: INSPERITY, INC.
Filing Date: 2025-08-01
Form: 10-Q
Item: Item 8
Chunk 20
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 2025 compared to YTD 2024, representing approximately 26% and 25% of our total average paid WSEEs in YTD 2025 and YTD 2024, respectively.  

Insperity | 2025 Second Quarter Form 10-Q26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Gross Profit

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. 

Our gross profit per WSEE and operating results are significantly impacted by our ability to accurately estimate direct costs and our ability to incorporate changes in these costs into the gross billings charged to PEO HR Solutions clients, which are subject to pricing arrangements that are typically renewed annually. We use gross profit per WSEE per month as our principal measurement of relative performance at the gross profit level.

Gross Profit andYear-over-Year Growth Percentage(in millions)

Insperity | 2025 Second Quarter Form 10-Q27

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Gross Profit per WSEE per Month andYear-over-Year Growth Percentage

Second Quarter 2025 Compared to Second Quarter 2024

Gross profit for Q2 2025 decreased 14% to $223 million compared to $260 million in Q2 2024. Gross profit per WSEE per month for Q2 2025 decreased $42 to $240 compared to $282 in Q2 2024 due primarily to higher direct costs, offset in part by higher average pricing, as discussed below.

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 $45 due to higher average pricing of 3%. 

The net increase in direct costs between Q2 2025 and Q2 2024 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $24 million as discussed below. The $87 per WSEE per month increase in direct costs is due primarily to the direct cost component changes as follows:

Benefits costs

•The cost of group health insurance and related employee benefits increased $65 per WSEE per month and increased 9.6% on a cost per covered employee basis driven by continued elevated pharmacy trends