Company: NSP
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001000753-25-000107
Chunk: 38

Company: INSPERITY, INC.
Filing Date: 2025-11-04
Form: 10-Q
Item: Item 7
Chunk 38
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4, representing approximately 26% of our total average paid WSEEs in both YTD 2025 and YTD 2024. 

Insperity | 2025 Third 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 Third 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

Third Quarter 2025 Compared to Third Quarter 2024

Gross profit for Q3 2025 decreased 15% to $195 million compared to $229 million in Q3 2024. Gross profit per WSEE per month for Q3 2025 decreased $39 to $208 compared to $247 in Q3 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 $46 due to higher average pricing of 3%. 

The net increase in direct costs between Q3 2025 and Q3 2024 attributable to the changes in cost estimates for benefits and workers’ compensation totaled $15 million as discussed below. The $85 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 $60 per WSEE per month and increased 9.1% on a cost per covered employee basis driven by elevated inpatient, outpatient and pharmacy trends