Company: NSP
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0001000753-25-000023
Chunk: 32

Company: INSPERITY, INC.
Filing Date: 2025-04-29
Form: 10-Q
Item: Item 7
Chunk 32
---
. Our average number of WSEEs per month in our middle market sector increased 4% during Q1 2025 compared to Q1 2024, representing approximately 26% and 25% of our total average paid WSEEs in Q1 2025 and Q1 2024, respectively.  

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 Outsourcing 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.

Insperity | 2025 First Quarter Form 10-Q25

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

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

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

First Quarter 2025 Compared to First Quarter 2024

Gross profit for Q1 2025 decreased 10% to $310 million compared to $345 million in Q1 2024. Gross profit per WSEE per month for Q1 2025 decreased $40 to $338 compared to $378 in Q1 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 $52 due to higher average pricing of 3%.

The net increase in direct costs between Q1 2025 and Q1 2024 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $32 million as discussed below. The $92 per WSEE per month increase in direct costs is due primarily to the direct cost component changes as follows:

Insperity | 2025 First Quarter Form 10-Q26

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

Benefits costs

•The cost of group health insurance and related employee benefits increased $56 per