Insperity Q3 Adjusted EBITDA Jumps 210% on Margin Recovery

Insperity Inc. (NYSE: NSP) reported a sharp improvement in third-quarter 2026 profitability as its margin recovery plan more than offset a modest decline in paid worksite employees. Adjusted EBITDA rose 210% from a year earlier, while adjusted earnings per share improved to $0.22 from a loss of $0.20.

Gross profit increased 6% in the quarter and operating expenses declined 5%, reflecting progress on the company’s primary 2026 objective of restoring margins. Average paid worksite employees, or WSEEs, decreased 2% year over year as new-client sales and client retention remained affected by the margin recovery plan. Net hiring increased from the prior-year quarter, including seasonal summer hiring in both periods.

Management said stronger activity during the fall sales campaign had begun to build the sales pipeline, though recent sales results continued to reflect the company’s emphasis on margin recovery.

Nine-month earnings and liquidity

For the first nine months of 2026, average paid WSEEs declined 1% from the comparable 2025 period. Adjusted EBITDA increased 18% to $170 million from $144 million, while adjusted EPS rose 13%. The EPS result was constrained by a higher-than-expected effective tax rate associated with the first-quarter vesting of employee stock awards.

Adjusted cash totaled $119 million at Sept. 30, up from $95 million at June 30 and $57 million at the end of 2025. Total debt stood at $419 million, compared with $369 million at Dec. 31, while working capital increased to $179 million from $102 million.

During the third quarter, Insperity paid $23 million in dividends, spent $6 million on share repurchases and invested $13 million in capital expenditures. For the first nine months, dividends totaled $69 million and share repurchases amounted to $10 million.

2026 outlook

Insperity expects fourth-quarter average paid WSEEs of 306,000 to 308,000, representing a year-over-year decline of 1.4% to 2.0%. Fourth-quarter adjusted EPS is projected at $0.07 to $0.42, an increase of 112% to 170%, while adjusted EBITDA is expected to range from $24 million to $44 million, up 285% to 438%.

For the full year, the company forecasts average paid WSEEs of 305,500 to 306,000, down 1.3% to 1.5%. Adjusted EPS is expected to be $1.93 to $2.28, an increase of 87% to 121%, and adjusted EBITDA is projected at $194 million to $214 million, up 48% to 63%.

The company said its updated outlook incorporates third-quarter results, continued progress under the margin recovery plan and modest refinements to fourth-quarter assumptions. Insperity narrowed its full-year range while keeping the midpoint of its adjusted EBITDA forecast essentially unchanged. The outlook assumes an effective tax rate of about 28% for the fourth quarter and 36% for the full year.

Management also identified artificial intelligence as a potential source of demand for Insperity’s comprehensive human-resources services as small and medium-sized businesses navigate workforce changes. Its strategy combines AI capabilities with the experience of its HR professionals, though the presentation did not quantify the expected financial impact.

Risks to the outlook include adverse economic conditions, inflation and changes in U.S. trade policy, labor constraints, client losses, higher health insurance and workers’ compensation costs, regulatory and tax developments, technology or cybersecurity disruptions, and competitive pressure in the professional employer organization industry. Insperity also cautioned that it may not fully realize the anticipated benefits of its strategic partnership and joint solution with Workday.