Insperity, Inc. (NSP): history, ownership, mission, how it works & makes money

A Brief History of Insperity, Inc.

Insperity, Inc. has established itself as a leading provider of human resources and business solutions, primarily through its Professional Employer Organization (PEO) services. As of 2024, the company continues to serve small and medium-sized businesses across the United States, providing a comprehensive suite of HR services.

Financial Performance Overview

In the third quarter of 2024, Insperity reported revenues of $1.561 billion, representing a 1% increase compared to $1.551 billion in Q3 2023. Year-to-date revenues for 2024 reached $4.968 billion, also up 1% from $4.906 billion in the same period last year.

Operating Metrics

For the third quarter of 2024, the average number of Worksite Employees Enrolled (WSEEs) decreased by 2% to 309,088 compared to 315,340 in Q3 2023. In the first nine months of 2024, the average WSEEs paid decreased by 1% to 306,650 from 311,112 in the same period the previous year.

Cost Structure and Expenses

Operating expenses for YTD 2024 increased by 13% to $702 million compared to $619 million in YTD 2023. The increase was driven by several factors, including:

• Salaries increased by 13% to $393 million.
• Stock-based compensation rose by 12% to $47 million.
• General and administrative expenses surged by 27% to $167 million.

Market Position and Strategic Changes

Insperity's strategic focus has remained on enhancing its service offerings through technology and expanding its market presence. The company has established partnerships to improve its service delivery, notably through its collaboration with Workday, which involves significant investments in SaaS solutions.

Shareholder Returns and Dividends

The company declared dividends totaling $67 million in the first nine months of 2024, an increase from $63 million in the same period in 2023. The quarterly dividends for 2024 were set at:

• First quarter: $0.57
• Second quarter: $0.60
• Third quarter: $0.60

Insperity's commitment to returning value to shareholders is reflected in its consistent dividend policy, even as the company navigates a challenging economic landscape.

Future Outlook

Looking forward, Insperity aims to maintain its growth trajectory by leveraging technology, optimizing operations, and enhancing client engagement, positioning itself as a leader in the HR services industry. The company's adaptability to market changes and focus on customer satisfaction will be critical in driving future success.

A Who Owns Insperity, Inc. (NSP)

Current Shareholder Composition

As of 2024, Insperity, Inc. (NSP) has a diverse shareholder base, consisting of institutional investors, mutual funds, and individual shareholders. The following table summarizes the major shareholders and their respective ownership percentages:

Executive Ownership

Executive officers and directors also hold a significant portion of Insperity's shares, contributing to the alignment of their interests with those of shareholders.

Market Capitalization

As of September 30, 2024, Insperity, Inc. has a market capitalization of approximately $1.5 billion, reflecting a stock price of $48.50 per share.

Recent Stock Performance

Insperity's stock has experienced fluctuations over the past year. The following table provides a summary of its stock performance:

Institutional Ownership Trends

Institutional ownership has seen a rise in recent quarters, reflecting increased confidence in Insperity's business model and growth prospects. The following table illustrates the trend in institutional ownership over the past year:

Dividend Policy

Insperity has a consistent dividend policy, with the following details regarding its recent dividend payments:

Insperity, Inc. (NSP) Mission Statement

Insperity, Inc. is dedicated to providing a comprehensive suite of human resources and business solutions designed to help improve business performance. The company aims to deliver top-tier PEO HR Outsourcing Solutions, which include payroll and employment administration, employee benefits, workers' compensation, and government compliance, thereby fostering a co-employment relationship with its clients.

Financial Performance Overview

As of September 30, 2024, Insperity reported the following financial metrics:

Key Operating Metrics

Insperity utilizes several key operating metrics to gauge performance, including:

• Average Worksite Employees (WSEEs) paid: 309,088 in Q3 2024, down 2% from 315,340 in Q3 2023.
• Adjusted EBITDA: $39 million in Q3 2024, down 59% from $95 million in Q3 2023.
• Adjusted Net Income: $15 million in Q3 2024, down 73% from $55 million in Q3 2023.

Revenue Breakdown

The revenue structure is primarily derived from gross billings based on the payroll cost of WSEEs, along with a markup component. For Q3 2024, the revenue breakdown is as follows:

Operating Expenses Analysis

The operating expenses for Insperity in Q3 2024 were significantly impacted by various factors:

Market Position and Client Base

Insperity serves small and medium-sized businesses across the United States, focusing on delivering tailored HR solutions. The company's mission emphasizes not only improving business performance but also building long-term partnerships with clients through its Workforce Optimization® and Workforce Synchronization™ solutions.

Conclusion of Financial Metrics

As of September 30, 2024, Insperity's operational and financial metrics reflect a challenging year, with decreases in net income and earnings per share, despite slight increases in revenue. The company's strategic focus remains on enhancing client satisfaction and operational efficiency to drive future growth.

How Insperity, Inc. (NSP) Works

Company Overview

Insperity, Inc. provides a range of human resources and business solutions primarily through its professional employer organization (PEO) services. These services encompass payroll and employment administration, employee benefits, workers’ compensation, compliance, performance management, and training, facilitated via the Insperity Premier platform.

Financial Performance

As of Q3 2024, Insperity reported revenues of $1.561 billion, representing a 1% increase from $1.551 billion in Q3 2023. The gross profit for the same period decreased by 11% to $229 million, down from $258 million a year earlier. Operating income also saw a significant drop, down 98% to $1 million from $59 million in Q3 2023.

Year-to-Date Performance

For the first nine months of 2024, Insperity's revenues increased by 1% to $4.968 billion compared to $4.906 billion in the same period of 2023. Gross profit for this period rose 2% to $834 million, a slight increase from $815 million. However, net income decreased by 34% to $100 million, down from $152 million in the prior year.

Operating Expenses

Operating expenses for Q3 2024 totaled $228 million, an increase of 15% from $199 million in Q3 2023. Key components of operating expenses included:

• Salaries: $127 million (up 11% from $114 million)
• Stock-based compensation: $17 million (up 6% from $16 million)
• Advertising: $9 million (up 29% from $7 million)
• General and administrative expenses: $53 million (up 33% from $40 million)

Key Operating Metrics

Insperity monitors several key metrics to gauge performance, including the number of worksite employees (WSEEs) paid, adjusted EBITDA, and adjusted EPS. As of Q3 2024, the average number of WSEEs paid per month decreased by 2% to 309,088 compared to 315,340 in Q3 2023.

Liquidity and Capital Resources

As of September 30, 2024, Insperity had cash, cash equivalents, and marketable securities totaling $486 million. After accounting for liabilities, the adjusted cash and equivalents stood at $212 million. The company had working capital of $200 million compared to $159 million at the end of 2023.

How Insperity, Inc. (NSP) Makes Money

Revenue Generation

Insperity, Inc. primarily generates revenue through its Professional Employer Organization (PEO) services, which provide comprehensive HR solutions to small and medium-sized businesses across the United States. The revenue model is based on gross billings, which include payroll costs and a markup percentage applied to those costs.

Financial Performance Overview

For the third quarter of 2024, Insperity reported total revenues of $1.561 billion, a slight increase of 1% compared to $1.551 billion in the same period of 2023. For the first nine months of 2024, revenues reached $4.968 billion, also reflecting a 1% increase from $4.906 billion in 2023.

Key Financial Metrics

Client and Employee Metrics

The average number of Worksite Employees (WSEEs) paid per month decreased by 2% in Q3 2024 to 309,088 compared to 315,340 in Q3 2023. For the first nine months of 2024, the average WSEEs paid per month also decreased by 1%.

Cost Structure

In Q3 2024, Insperity's total operating expenses amounted to $228 million, up 15% from $199 million in Q3 2023. Key components included:

• Salaries: $127 million (up 11% from $114 million)
• Stock-based compensation: $17 million (up 6% from $16 million)
• General and administrative expenses: $53 million (up 33% from $40 million)

Client Revenue by Region

Revenue from Insperity's PEO HR Outsourcing Solutions for Q3 2024 by region is as follows:

Direct Cost Components

The direct costs associated with WSEEs, which include payroll taxes, benefits, and workers’ compensation, were reported as follows:

• Payroll taxes, benefits, and workers’ compensation costs for Q3 2024: $1.332 billion
• Gross profit margin per WSEE per month: $247

Cash Flow and Liquidity Position

As of September 30, 2024, Insperity had cash and cash equivalents totaling $486 million. The company reported net cash used in operating activities of $99 million for the first nine months of 2024.

Conclusion on Financial Health

Insperity's financial performance in 2024 indicates a stable revenue base, though the decrease in average WSEEs paid suggests challenges in client acquisition and retention. The increase in operating expenses highlights the need for efficiency improvements to maintain profitability in a competitive market.

Article updated on 8 Nov 2024

Resources:

• Insperity, Inc. (NSP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Insperity, Inc. (NSP)' financial performance, including balance sheets, income statements, and cash flow statements.
• SEC Filings – View Insperity, Inc. (NSP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.