NSP

Insperity is a well-established PEO whose franchise quality is masked by a sharp fundamental deterioration in FY2025. Headline revenue of $6.81B (+3.5%) is largely pass-through payroll and misleads — the metric that matters is gross profit, which fell 14.4% to $900M. The MD&A names the culprit plainly: gross profit per WSEE dropped 15% as a 9% jump in benefits costs per participant overwhelmed only a 3% pricing increase, while paid WSEE count grew just 1% to 310,089. That cost/price mismatch pushed operating income to -$10M and net income to -$7.00M (from +$91M), with diluted EPS of -$0.19. Even on management's own adjusted figures the picture is poor: adjusted EBITDA fell 51% to $131M and adjusted EPS fell 71% to $1.03.

The balance sheet shows the strain. Stockholders' equity collapsed 52.6% to just $46.0M, cash fell 38.2% to $642M, and operating cash flow swung to -$278M. Against that, the company paid $90M in dividends and $19M in buybacks in 2025 — capital returns that now far exceed both GAAP earnings (a loss) and adjusted net income of $39M. Working capital is a thin $102M. This is a payout funded from a shrinking cushion, not from current profitability, and it raises a real question about dividend durability if the benefits-cost trend persists.