การประชุมแถลงผลประกอบการไตรมาส 3 ปี 2026 ของ Insperity (NSP): การฟื้นตัวของอัตรากำไรช่วยหนุน EBITDA

ประเด็นสำคัญ

• การฟื้นตัวของอัตรากำไรเร่งตัวขึ้น: กำไรขั้นต้นในไตรมาส 3/2026 เพิ่มขึ้น 6% เมื่อเทียบรายปี สู่ระดับ 207 ล้านดอลลาร์ ขณะที่กำไรขั้นต้นต่อพนักงานในสถานที่ทำงานเพิ่มขึ้น 8% สู่ระดับ 225 ดอลลาร์ต่อเดือน
• ความสามารถในการทำกำไรปรับตัวดีขึ้นอย่างมาก: EBITDA ปรับปรุงแล้วแตะระดับ 31 ล้านดอลลาร์ เพิ่มขึ้น 210% จากไตรมาส 3/2025 ขณะที่ EPS ปรับปรุงแล้วอยู่ที่ 0.22 ดอลลาร์ เมื่อเทียบกับขาดทุนปรับปรุงแล้ว 0.20 ดอลลาร์ต่อหุ้นในปีก่อนหน้า
• จำนวนพนักงานในสถานที่ทำงานยังคงเผชิญแรงกดดัน: จำนวนพนักงานในสถานที่ทำงานที่ได้รับค่าจ้างเฉลี่ยลดลง 1.8% เมื่อเทียบรายปี สู่ระดับ 307,265 คน เนื่องจากมาตรการกำหนดราคาและการคัดเลือกลูกค้าส่งผลกระทบต่อยอดขายและการรักษาลูกค้า
• การควบคุมต้นทุนช่วยสนับสนุนผลกำไร: ค่าใช้จ่ายในการดำเนินงานลดลง 5% สู่ระดับ 209 ล้านดอลลาร์ โดยมีสาเหตุหลักมาจากจำนวนบุคลากรและค่าตอบแทนขององค์กรที่ลดลง
• แนวโน้มตลอดปีแคบลง: ผู้บริหารคาดว่า EBITDA ปรับปรุงแล้วในปี 2026 จะอยู่ที่ 194 ล้านดอลลาร์ ถึง 214 ล้านดอลลาร์ และ EPS ปรับปรุงแล้วจะอยู่ที่ 1.93 ดอลลาร์ ถึง 2.28 ดอลลาร์
• การฟื้นฟูการเติบโตกำลังดำเนินอยู่: กิจกรรมการขายและจำนวนผู้มุ่งหวังปรับตัวดีขึ้นในไตรมาส 3 ขณะที่ HR Scale มีพนักงานหลายพันคนที่อยู่ในขั้นตอนการปรับใช้ ผู้บริหารระบุว่าสิ่งสำคัญอันดับแรกในปี 2027 คือการสร้างสมดุลระหว่างการเติบโตระลอกใหม่กับความสามารถในการทำกำไรที่ยั่งยืน

ข้อมูลทางการเงินที่สำคัญ

ผลการดำเนินงานทางธุรกิจและการปฏิบัติการ

อินสเปอริตี (Insperity) ระบุว่าการปรับตัวดีขึ้นของกำไรขั้นต้นต่อพนักงานในสถานที่ทำงานมีสาเหตุหลักมาจากผลกระทบสะสมของมาตรการด้านราคา การรักษาลูกค้า และการคัดเลือกลูกค้า นอกจากนี้ ส่วนผสมลูกค้าที่เอื้ออำนวยมากขึ้นยังช่วยควบคุมต้นทุนสวัสดิการ ควบคู่ไปกับการเปลี่ยนแปลงแผนสวัสดิการและเงื่อนไขสัญญาใหม่ของยูไนเต็ดเฮลท์ (UnitedHealth) ที่เริ่มใช้เมื่อต้นปี 2026

ต้นทุนเงินชดเชยแรงงานได้ลดทอนการปรับตัวดีขึ้นของกำไรขั้นต้นบางส่วน แม้ว่าต้นทุนในงวดปัจจุบันจะยังคงทรงตัว แต่การปรับปรุงสำรองเงินสำหรับกรมธรรม์ปีก่อนๆ ในทิศทางบวกกลับลดลงเมื่อเทียบกับไตรมาส 3/2025 ผู้บริหารเชื่อมโยงแรงกดดันนี้เข้ากับความรุนแรงของเรียกร้องค่าสินไหมทดแทนที่สูงขึ้นและต้นทุนค่าบริการสุขภาพที่เพิ่มสูงขึ้น

โครงการฟื้นฟูอัตรากำไรยังคงส่งผลกระทบต่อยอดขายใหม่และการรักษาลูกค้า อย่างไรก็ตาม จำนวนผู้มุ่งหวังทางการตลาดปรับตัวดีขึ้น และจำนวนโปรไฟล์ธุรกิจ หรือโอกาสในการเสนอราคาเพื่อให้บริการ เพิ่มขึ้นในแต่ละเดือนระหว่างไตรมาส 3 โดยกิจกรรมเหล่านี้สำเร็จได้ด้วยจำนวนที่ปรึกษาด้านผลการดำเนินงานทางธุรกิจที่ลดลง ซึ่งแสดงถึงกิจกรรมต่อที่ปรึกษาที่สูงขึ้น

อินสเปอริตีระบุว่า โอกาสการขายในตลาดระดับกลางสำหรับ HR 360 และ HR Scale ยังคงแข็งแกร่ง มีพนักงานหลายพันคนที่อยู่ในกระบวนการปรับใช้ HR Scale ลูกค้าบางรายเลือก HR 360 เพื่อการเริ่มต้นใช้งานที่รวดเร็วกว่า ขณะที่วางแผนจะเปลี่ยนไปใช้ HR Scale ในภายหลัง

บริษัทกำลังพัฒนาขีดความสามารถด้าน AI ทั้งผ่านความร่วมมือกับเวิร์กเดย์ (Workday) และระบบที่เป็นกรรมสิทธิ์ของตนเอง โดยเอเจนต์ AI ของ HR 360 ได้รับการออกแบบมาเพื่อเสนอคำแนะนำด้าน HR เฉพาะสำหรับแต่ละบริษัท ขณะที่ฟีเจอร์ปัญญาประดิษฐ์เชิงสนทนาที่วางแผนไว้จะช่วยให้ลูกค้าสามารถขอรายงานและข้อมูลเชิงลึกเกี่ยวกับกำลังคนโดยใช้ภาษาพูดทั่วไปได้ ผู้บริหารกล่าวว่าผู้เชี่ยวชาญด้าน HR ยังคงมีความสำคัญหลักในการตีความข้อมูลเชิงลึกเหล่านั้นและสนับสนุนการตัดสินใจของลูกค้า

แนวทางของผู้บริหาร

ผู้บริหารคาดว่าจำนวนพนักงานในสถานที่ทำงานที่ได้รับค่าจ้างในไตรมาส 4 จะยังคงค่อนข้างทรงตัวเมื่อเทียบกับไตรมาสก่อนหน้า โดยการเพิ่มขึ้นของลูกค้าใหม่จะถูกชดเชยด้วยการสูญเสียลูกค้าเกือบทั้งหมด นอกจากนี้ แนวโน้มการจ้างงานสุทธิที่เป็นบวกคาดว่าจะถูกชดเชยด้วยการลาออกของพนักงานตามฤดูกาลในเดือนธันวาคมของลูกค้ารายใหญ่รายหนึ่ง

บริษัทคาดว่ากำไรขั้นต้นในไตรมาส 4 จะปรับตัวดีขึ้นอีกเมื่อเทียบรายปี จากมาตรการด้านราคาและส่วนผสมลูกค้าที่เอื้ออำนวย ค่าใช้จ่ายในการดำเนินงานคาดว่าจะลดลงเมื่อเทียบรายปี โดยมีสาเหตุหลักมาจากต้นทุนที่เกี่ยวข้องกับค่าตอบแทนที่ลดลง ส่วนค่าใช้จ่ายของ HR Scale ควรจะยังคงสอดคล้องกับงบประมาณโดยทั่วไป

อินสเปอริตีคาดว่าอัตราภาษีที่แท้จริงสำหรับการคำนวณ EPS ปรับปรุงแล้วจะอยู่ที่ประมาณ 36% และจำนวนหุ้นถัวเฉลี่ยถ่วงน้ำหนักที่ชำระแล้วอยู่ที่ประมาณ 38.6 ล้านหุ้นสำหรับปี 2026

ความเสี่ยงและประเด็นที่ต้องจับตา

• มาตรการด้านราคาและการคัดเลือกลูกค้ายังคงกดดันยอดขายใหม่และการรักษาลูกค้า
• ผู้บริหารระบุว่าผลลัพธ์ของแคมเปญการขายและการต่ออายุสัญญาในช่วงฤดูใบไม้ร่วงยังคงมีความผันผวนในช่วงกว้าง เนื่องจากความไวต่อราคา ความไม่แน่นอนของตลาด และความไม่แน่นอนเกี่ยวกับการเลือกตั้ง
• แนวโน้มต้นทุนค่าบริการสุขภาพยังคงสูงขึ้นทั่วทั้งตลาด ผลประโยชน์เชิงโครงสร้างจากการเปลี่ยนแปลงแผนและสัญญาในปี 2026 คาดว่าจะกลายเป็นกลางมากขึ้นในปี 2027 เมื่อฐานเปรียบเทียบเข้าสู่ภาวะปกติ
• การปรับปรุงสำรองเงินชดเชยแรงงานเผชิญแรงกดดันจากความรุนแรงของเรียกร้องค่าสินไหมทดแทน เงินเฟ้อด้านค่าบริการสุขภาพ และระยะเวลาที่ยาวนานของข้อเรียกร้องเก่า
• การสูญเสียลูกค้าในช่วงสิ้นปีอาจส่งผลกระทบอย่างมีนัยสำคัญต่อระดับเริ่มต้นของจำนวนพนักงานในสถานที่ทำงานที่ได้รับค่าจ้างในเดือนมกราคม 2027
• การลงทุนซ้ำในค่าใช้จ่ายในอนาคตจะขึ้นอยู่กับความเร็วที่กิจกรรมการขายเปลี่ยนเป็นการเติบโตระลอกใหม่

ประเด็นสำคัญจากการตอบคำถามนักวิเคราะห์

การพัฒนา AI และเวิร์กเดย์ (Workday): ผู้บริหารกล่าวว่าอินสเปอริตีตั้งใจที่จะใช้ขีดความสามารถ AI ที่ขยายตัวของเวิร์กเดย์ ขณะเดียวกันก็พัฒนาเครื่องมือที่เป็นกรรมสิทธิ์ของตนเองอย่างต่อเนื่องโดยอิงตามข้อมูลลูกค้าในอดีต ความเชี่ยวชาญด้าน HR และกระบวนการทำงานภายใน บริษัทมองว่า AI เป็นทั้งเครื่องมือเพิ่มผลิตภาพและเป็นวิธีเสริมสร้างบทบาทเชิงกลยุทธ์กับธุรกิจขนาดเล็กและขนาดกลาง

ต้นทุนค่าบริการสุขภาพและเงินชดเชยแรงงาน: ผู้บริหารคาดว่าผลกระทบเชิงโครงสร้างที่ดีของการเปลี่ยนแปลงแผนสวัสดิการและสัญญากับยูไนเต็ดเฮลท์ (UnitedHealth) ในปี 2026 จะกลายเป็นกลางมากขึ้นในปีหน้า อย่างไรก็ตาม ผลประโยชน์จากส่วนผสมลูกค้าจากการรักษาลูกค้าและการปรับราคาอาจดำเนินต่อไปเมื่อบริษัทรับรู้ผลกระทบเต็มปี นอกจากนี้ อินสเปอริตียังได้ดำเนินการขึ้นราคาชดเชยแรงงานและมีแผนที่จะปรับเปลี่ยนเพิ่มเติมหากสภาวะตลาดเปลี่ยนแปลงไป

ศักยภาพการเติบโตของ HR Scale: ผู้บริหารคาดว่า HR Scale จะกลายเป็นส่วนประกอบสำคัญของกลยุทธ์ตลาดระดับกลาง การเสนอ HR 360 ควบคู่ไปกับ HR Scale ช่วยให้ลูกค้าสามารถเริ่มใช้งานได้รวดเร็วยิ่งขึ้นและมีแนวโน้มที่จะเปลี่ยนไปใช้แพลตฟอร์มที่ใหญ่ขึ้นในภายหลัง

แนวโน้มค่าใช้จ่ายในการดำเนินงาน: การลดจำนวนพนักงานก่อนหน้านี้ได้รีเซ็ตฐานต้นทุนและสนับสนุนการลดลงของค่าใช้จ่ายในไตรมาส 3 ผู้บริหารระบุว่าอาจมีการลงทุนซ้ำบางส่วนหากการเติบโตกลับมา แต่กล่าวว่าบริษัทจะยังคงมีความยืดหยุ่นจนกว่าแผนการดำเนินงานปี 2027 และการเปลี่ยนผ่านของลูกค้าในช่วงสิ้นปีจะมีความชัดเจนยิ่งขึ้น

บันทึกการประชุมแถลงผลประกอบการฉบับเต็ม

บทถอดเสียงฉบับเต็มของการประชุมทางโทรศัพท์ผลประกอบการ

คำชี้แจงจากฝ่ายบริหาร

Operator

Good morning, my name is Ali, and I will be your conference operator today. I would like to welcome everyone to the Insperity Third Quarter 2026 Earnings Conference Call. [Operator Instructions]. And please note, this conference is being recorded. At this time, I would like to introduce today's speakers. Joining us are Paul Sarvadi, Chairman of the Board and Chief Executive Officer; and Jim Allison, Executive Vice President of Finance and Chief Financial Officer and Treasurer.

At this time, I'd like to turn the call over to Jim Allison. Mr. Allison, please go ahead.

James Allison

Thank you. We appreciate you joining us today. Let me begin by outlining our plan for this morning's call. First, I'm going to discuss the details behind our third quarter 2026 financial results. Paul will then comment on the progress of our margin recovery plan the fall selling and client renewal season and our AI strategy and initiatives. I will return to provide financial guidance for the fourth quarter and full year 2026. We will then end the call with a question-and-answer session.

Before we begin, I would like to remind you that Paul or I may make forward-looking statements during today's call, which are subject to risks, uncertainties and assumptions. In addition, some of our discussion may include non-GAAP financial measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any such forward-looking statements, and reconciliations of non-GAAP financial measures to their comparable GAAP measures, please see the company's public filings, including the Form 8-K filed today, which are available on our website. Our third quarter results mark a key milestone in our margin recovery plan. Gross profit per worksite employee increased 8% over Q3 2025. And reversing the year-over-year declines we reported throughout 2025 and into the first half of this year, driven by the cumulative impact of our pricing and client retention strategy.

That improvement, together with continued operating expense discipline, produced Q3 adjusted EPS and adjusted EBITDA above the midpoint of our forecasted ranges and significantly improved from Q3 2025. Third quarter adjusted EPS was $0.22, a $0.42 per share improvement over the adjusted loss per share of $0.20 in Q3 2025. Adjusted EBITDA for the quarter was $31 million, an increase of 210% from Q3 2025. The average number of paid worksite employees was 307,265 in Q3. a modest year-over-year decline of 1.8% against the backdrop of the margin recovery plan. All 3 of these key metrics were above the midpoint of our forecasted ranges. With regards to unit growth, the margin recovery plan continued to be a headwind for new client sales and client retention compared to Q3 2025. And while we saw some improvement in net hiring within the client base compared to last year.

Paul will provide more color around sales and retention results in a few minutes. At the same time, the financial impact of the margin recovery plan has significantly outpaced the worksite employee headwind. Total gross profit in Q3 2026 increased by 6% to $207 million in line with our forecast and expected seasonal pattern. Gross profit for worksite employee increased by 8% to $225 per month, a significant improvement over the 1% decline reported in Q2, validating the effectiveness of our margin recovery plan. This flipped to a year-over-year increase in the gross profit metrics was primarily driven by the cumulative impact of our pricing and client retention strategy. The year-over-year increase in our pricing continued to accelerate as it has done throughout the year. Our strategy has also produced a favorable client mix change that has helped to bolster our efforts to positively impact benefits costs beyond our planned design changes and new UnitedHealth contract terms that took effect at the beginning of the year. For Q3, benefits cost per covered employee increased by 3.7% over Q3 2025, consistent with our expectations. Within our gross profit results, the significant progress of the margin recovery plan was somewhat offset by a year-over-year increase in reported workers' compensation costs.

While we have seen relative stability in our current period workers' compensation costs, favorable adjustments and actuarial reserves related to prior policy years. declined in Q3 2026 versus Q3 2025. This impact was similar to what we experienced in Q2 and continues to reflect a market-wide increase in claim severity with elevated health care cost trends being a significant contributor. We have taken and will continue to take appropriate pricing actions consistent with these market conditions, which we expect to persist beyond the near term. Operating expense management is another key component of our margin recovery plan. In Total operating expenses decreased by 5% to $209 million versus Q3 2025, primarily due to lower corporate staffing levels and related compensation costs.

Operating expenses associated with HR scale in Q3 were generally in line with budgeted levels. During the quarter, we continued to return capital to our shareholders through our regular dividend program and share repurchases. We paid $23 million in dividends and repurchased 131,000 shares of stock at a total cost of $6 million. We ended the quarter with $119 million of adjusted cash compared to $95 million at the end of Q2. At this time, I'd like to turn the call over to Paul.

Paul Sarvadi

Thank you, Jim, and thanks to everyone for joining our call. We're pleased with our solid third quarter financial results, reflecting continued progress on our top priority of 2026 margin recovery and achieving a meaningful step forward in restoring the earnings power of our business model. We're also making early progress increasing sales and client retention activities as we launched our fall campaign. Stronger sales activity has begun to fill the pipeline to improve sales. However, recent sales results continue to reflect our margin recovery priority.

Today, I'll discuss our operating progress and then turn to which we believe has the potential to strengthen demand for Insperity's comprehensive HR solutions as small and midsized businesses navigate this workplace transformation. Our strategy seeks to combine the power of AI with the experience of our HR professionals to help our clients' businesses succeed, further strengthen our offering and deepen client relationships which we believe will drive long-term growth and shareholder value.

Coming into 2026, we established a clear sequence, we cover margin, rebuild growth momentum and position the business for a better balance of growth and profitability in 2027. Our third quarter performance represents another important step in that direction. As we discussed on previous calls, our margin recovery efforts have included pricing strategy, benefit plan changes, broader benefit options and improvements in our operational processes. These actions have successfully addressed the health care cost pressure we experienced in 2025 and are expected to support a stronger economic foundation for our business going forward. That progress has involved trade-offs, pricing and client selection decisions that support margin recovery can also affect new sales and client retention.

Those effects remain evident in our results, which included a 2% year-over-year decline in the average number of worksite employees paid per month in Q3. Our fall sales and retention campaign is our opportunity to begin to rebuild growth momentum and activity levels are increasing. Marketing lead flow has improved and we have a solid pipeline of mid-market HR 360 and HR scale prospects. HR scale remains on track to meet our previously stated targets with several thousand employees currently in implementation. Offering both options, HR 360 and HR scale to mid-market customers continues to benefit prospects and clients and supports our long-term plan for this segment.

Some new mid-market and enterprise accounts have chosen HR 360 for a faster path to onboarding, addressing HR service or benefits needs as a priority. However, they also plan to upgrade the HR scale when implementation can be scheduled at a later date, demonstrating a long-term view of the relationship. One of our most important leading indicators of future sales is the number of business profiles or opportunities to bid our services we achieve each month. We are encouraged by progress in Q3 as this activity metric trended upward each month in the third quarter to a solid total for the full quarter. Achieving this volume with fewer business performance advisers indicates improvement in activity per BPA.

Renewals are also on schedule and supporting messaging has been updated and communicated postal organization to reinforce client renewal decisions. This included providing context around the health care trend levels and actions we have taken to moderate those effects on behalf of our clients and continue to provide comprehensive benefit plan options. We also have new AI communication and demo video that we believe is important to emphasize the expected step-up in value of our HR solutions as SMB clients face the AI challenges ahead. However, it's still very early in the campaign and the range of possible outcomes remains wide.

Ongoing margin recovery efforts, continued price sensitivity and market uncertainty including uncertainties surrounding the election remain challenged. It's too soon to draw conclusions about the campaign's ultimate sales and retention results, which factors into our starting point for paid worksite employees in January. Our objective is not simply to add volume, it's to build durable growth on sound economics while delivering the breadth to depth and level of care clients expect from Insperity. The opportunity ahead is to preserve our margin progress while translating stronger activity and to improve sales and retention as we work to balance growth and profitability in 2027. Now beyond our near-term operating priorities, AI is changing the way we think about the future of HR and the opportunity for Insperity.

We believe AI is a technology-based innovation driving an extraordinary workplace transformation, rapidly increasing the need for sophistication in the HR function in the SMB marketplace. We believe this reinforces the value of our comprehensive deeply integrated service relationship. AI is changing how work gets done for individuals, teams and company-wide, both internally with employees and externally with customers. Business owners and managers must rethink job responsibilities, required skills, hiring needs and how teams are organized, all of which are challenges that land in the HR department. That creates a broad set of HR responsibilities, updating job descriptions, compensation and incentives, identifying skill gaps supporting employee development, equipping managers and aligning policies and practices.

AI could also change hiring patterns, workforce composition and employment growth. We anticipate this elevated volume of HR activity, including hiring and firing will also create additional employment-related complexity, risk and stress for employers. For an SMB with limited internal resources, the amount and speed of change can be difficult to manage a loan. We believe the heightened need for HR expertise to help business owners navigate the complexity and manage the liability will increase demand for HR solutions and guidance provided by Insperity. Our offering is not simply a collection of administrative task or access to software.

It's an integrated combination of technology, HR expertise, personalized service and an understanding of the clients' business and people. We believe AI can make historical and real-time information more accessible to clients and service providers. Our experience is help put that information in context and provide insights and then with the benefit of their judgment, support our clients' efforts to take action. In that sense, AI is highlighting our highest value attributes trust, judgment, care and the ability to stand shoulder to shoulder with a business owner as they navigate important workforce decisions. Our ambition extends beyond using AI within Insperity, we believe we have an opportunity to help lead the small and midsized business community through the workforce transformation that the AI era will ultimately require.

We believe that creates the possibility of a deeper strategic role with clients as they navigate change. Earnings that role will require continued innovation and highlight the personal service and care that have long defined our company. We are pursuing this AI opportunity in 3 connected areas how we develop technology and services, how we work internally and how our clients experience our solutions through AI tools we deploy. First, we're using AI to develop technology and services more productively, deliver meaningful enhancements faster and improve quality. Beyond making existing services more efficient, we are rethinking how technology and human expertise combined to meet client needs. Second, we're equipping our people with better access to knowledge and tools to improve productivity and service delivery.

Our proprietary AI platform provides a foundation for connecting HR and payroll expertise and business workflow processes with AI capabilities across the organization. By reducing time spent finding information and completing routine work, we aim to free our professionals to focus on where their expertise matters most to clients. Third, we're enhancing how our client experience our solutions. Our recently announced Insperity HR 360 AI agent represents an important step forward, making it easier for early adopter clients to find answers, navigate HR responsibilities and access guidance informed by company-specific policies with reduced need for escalation.

We also announced capabilities under development for the HR 360 AI agent, including conversational intelligence, which is designed to allow business owners to ask questions in everyday language rather than having to know where to look and how to assemble relevant information and receive real-time actionable insights. The planned functionality will allow users to enter simple command such as show me the head count by location or how have our employee engagement metrics trended over time and receive reports, scrape visualizations and contextual insights helping leaders access information more quickly and make better informed workforce decisions.

Our distinctive approach combines our internal AI development capabilities, extensive historical client and employee information, client-specific policies and our HR analytics engine. Our HR professionals remain essential in helping clients interpret those insights and acting on them. Let me be clear, our message is not simply that we've introduced another technology feature. We have launched a company-wide effort to help current clients and prospects understand the fundamental step up in value of our distinctive approach will provide for their businesses. Easier access to company-specific insights, combined with experienced HR guidance can help them make better decisions and move more quickly from information to action. We believe that combination magnifies our long-term competitive advantage and can improve the likelihood degree and speed of success of our clients in the SMB marketplace.

In closing, our priorities remain clear. sustained margin discipline, rebuild durable growth and use AI to strengthen the value we deliver through HR 360, HR core and HR scale. We believe progress on those priorities can support a better balance of growth and profitability in 2027 and long-term value creation for our shareholders. At this point, I'd like to pass the call back to Jim.

James Allison

Thanks, Paul. Our updated outlook for 2026 reflects our Q3 results, the continued progress of our margin recovery plan and several modest refinements to our fourth quarter assumptions. With 3 quarters of results behind us, we have narrowed our full year range while maintaining the adjusted EBITDA midpoint essentially unchanged. With regards to paid worksite employees, we expect sequential growth for the fourth quarter to be relatively flat. As paid worksite employees from new client sales and client attrition are expected to largely offset each other.

Net client hiring is expected to have a fairly small impact in Q4 as recent positive net hiring trends are expected to be offset by the reversion of seasonal employees in December at 1 of our larger clients. As a result, we are now forecasting paid worksite employees in a range of $306,000 and to $308,000 for Q4 2026, which represents a decrease of 1.4% to 2.0% from Q4 2025. For the full year, we are forecasting a range of 305,500 to $306,000, a decrease of 1.3% to 1.5% from 2025. Moving to margin recovery. Our pricing and client rich engine strategy is expected to produce some additional Q4 improvement at the gross profit level as compared to Q4 2025. As I mentioned earlier, our pricing has continued to accelerate on a year-over-year basis as we have executed the plan throughout 2026.

In addition, we continue to see that the profitability of terminating clients has been significantly lower than the profitability of those we are retaining, producing a favorable change in client mix that we expect to positively influence benefit costs in comparison to Q4 of 2025. With regards to operating expenses, we continue to expect year-over-year reductions in Q4, driven primarily by a continuation of lower compensation-related costs. HR scale operating expenses are expected to be generally in line with budget. As a result, we are forecasting adjusted EBITDA in a range of $24 million to $44 million, for Q4 2026 compared to negative $13 million in Q4 2024.

For full year 2026, we are forecasting $194 million to $214 million, an increase of 48% to 63% over 2025. We expect our full year effective tax rate for adjusted EPS purposes to be approximately 36%. The effective tax rate for GAAP purposes could fluctuate from that based on the level of nondeductible expenses as a proportion of pretax income. We expect our weighted average outstanding shares to be approximately $38.6 million for the full year. As a result, adjusted EPS is forecasted in a range of $0.07 to $0.42 per share for Q4. And compared to an adjusted loss per share of $0.60 in Q4 of 2025. For the full year, we are forecasting adjusted EPS of $1.93 and to $2.28 per share, an increase of 87% to 121% over 2025.

At this time, I'd like to open up the call for questions.

Operator

[Operator Instructions]. Our first question is coming from Mark Marcon with Baird.

ช่วงถาม-ตอบ

Mark Marcon

Well, first of all, congrats on the strong progress with regards to the increase in terms of the gross profit for expense employee and the profit recovery plan being successfully executed. It's really great to see I was wondering, can you talk a little bit more Paul about what you were going through on the AI front. To what extent are you incorporating your own tools versus taking advantage of all of the partnership with Workday. How is it Workday Rising? They obviously have a whole slew of different agents And so I'm familiar with those. But I'm just wondering if you would discuss to what extent are you leveraging those rather than just developing your own.

Paul Sarvadi

Yes. Thank you for that question, Mark. And we are super excited about how Workday has gone all in and become such an AI-driven company. And that has a lot of great possibilities for us as our partnership continues to develop. But at the same time, we have extensive AI capability that we have developed and been able to leverage so many of the investments we've made around our own data and extensive client historical information our extensive history of solving HR problems with our experts and what -- how all that comes together affects all three of our solutions because the service side is so critical for the customers in our space, small and midsized businesses. Like I've said in my comments, this is way more than just a technology innovation. This is a workplace transformation that's going on and it's going to be extensive in the small and midsized business community.

And our AI capabilities, along with the data and information that we have and the experts already on standby and capable of responding much quicker and much more consistently and able to be at the right hand of our clients to help them with this transformation, we believe this is going to be dramatic for the company. So we're excited about our expertise in this area and how that has improved our own internal capability to respond to this transformation, but also how we're able to deliver targeted solutions to our clients that will help them deal with this transformation as well. So it's great to have both the Workday long-term picture and opportunity there, but we're also excited about our own ability to deliver on this.

Mark Marcon

That's great. And then can you talk a little bit about it sounded like you had really nice progress with regards to the health care benefit cost trend and it came in right in line with your expectations for this quarter and you got the new UnitedHealthcare plan in place I know you're not giving guidance for next year, but how do you think health care cost trends are going to change as we look out towards next year because most investors are looking to next year and beyond in terms of the investment opportunity. And so I'm wondering how you're thinking about that. And then also, if you could just also comment on the workers' comp, that would be great.

Paul Sarvadi

Yes. I appreciate that, Mark. This year, we have some structural changes from plan design changes and the contract change that when we go flip over into next year, there's a little bit more of an apples-and-apples comparison there, right? So it's a tailwind this year, it's more neutral next year. So the -- our benefits cost trends are significantly under what I would -- this year, what I would call kind of the market rate. Partly, it's that structural change, partly it's the pricing and client renewal strategy that we've taken on. When I think about the client renewal strategy, we are seeing growing impact of that as we go through 2026.

There's not a full year impact in 2026, so there should be some continuing improvement in related to kind of getting a full year of that. At the same time, we recognize that cost trends in the marketplace as a whole for health insurance remain high. And so we have to be vigilant with how we're managing pricing as we go through not only year-end transition, but also into next year. I would say that, that concept is very similar to what we're seeing on the workers' compensation side. Obviously, there's multiple components to workers' compensation cost, health care is only one of them. But certainly, we're starting to see that the accumulation of open periods because you have a pretty long tail on workers' compensation claims we're seeing the actuary start to make some adjustments in the way they think about what it's going to take to close those old plans out.

We haven't seen a lot of change around current year, it's been relatively stable there. But we know this is a market that is heartening to some extent. And so in those market conditions, again, you don't want to get behind. So we are thinking about and have done some price increases on that front. And we'll continue to monitor that and evolve that as if market conditions change. But right now, we're seeing, again, the relative stability of what's going on in the health care space allows us to make some assumptions, put in pricing plans and play out.

Operator

Thank you. Our next question is coming from Jeff Martin with Roth Capital.

Jeff Martin

I wanted to dive into the advancement of the sales process and doing go-to-market with Workday. Specifically with respect to HR scale. It sounds like the middle market is on the uptake for 260, which is great because of the future scale clients. But if you could just update us on the progress of the joint go-to-market.

Paul Sarvadi

Yes, absolutely. We continue to be building that pipeline that, as I mentioned in my script. And so we've made good progress bringing clients on. We have several thousand in the queue for coming on as we move over into the new year. And so we're really on track in that. But the other comment I put in my script, I wanted to make sure people understood is that having these two solutions for this mid-market segment is really starting to pay dividends because rather than choosing to be with us or not being able to choose which solution is right for them to start with and which having people quite a few choosing to move on to 360 because of the speed of implementation and the ability to quickly address the service needs, maybe even benefit needs, et cetera. That's a great track. But what I love about it is they're also seeing HR scale as their long-term solution. And so they're starting the relationship with a commitment to the long term in both the products.

Jeff Martin

And then two quick questions for my second. With respect to HR scale and the impact in 2027, do you expect that to be a material growth driver for EBITDA and adjusted EPS. And then second part is, are you doing anything materially different with our fall sales campaign this year versus prior years?

Paul Sarvadi

So we certainly expect that to be a significant component. As our mid-market effort has been over the last 1.5 years, but now that with HR scale, we believe that, that adds some real benefit there. But equally important, we are really focused on bringing up the sales effort on the smaller accounts. That's where we're hit pretty heavily through this down period of causing the margin recovery. And we are really on the right track getting the number of opportunities to bid our services up and we have come through great progress on how we're working with clients through this period.

I know in Jim's comment almost added this comment on his last question because we've made great strides at being able to help our clients deal with this rising health insurance cost environment, offering various options, ways for them to move the cost down and to manage the cost with different plans that they get on we're able to communicate to them what's happening in the broader market. So we're just getting better and better at that. And so we think that's a big part of the next year also is seeing us get back to the right level of sales of BPA per month and have the activity levels right. And that's what we're starting to see in this fall selling campaign.

Operator

[Operator Instructions]. Our next question is coming from Brendan Biles with JPMorgan.

Brendan Biles

Hey, gentlemen. Thanks a lot for having me on the call and reiterate the comments on the congratulatory -- congratulations on the gross profit progress here, 6% to 8% on gross profit and gross profit per working was awesome. So concession that.

Yes, yes, absolutely. I want to double click on some of these stronger sales pipeline stuff that you guys said. I think it's really awesome about the stronger sales type refilling activity levels increasing sales leads. You talked about it a little already as it related to Workday. I wonder on the clients that you mentioned that have indicated their interest in long-term partnerships, signing up for R360 and kind of indicating that they would transition to HR scale. When implementation time line is right. If you could just share like a little bit more color as to where your head is at as it relates to that time line? And in that sales motion? Is there anything to call out as it relates to like AI needs that clients are bringing up now or in the future between HR 360 and HR scale? And I got a quick follow-up on OpEx after that.

Paul Sarvadi

Yes, that's a good question. And what we're seeing and hearing is certainly that, as I mentioned in my script that AI is causing -- it's really causing a lot of activity to land in the HR department. It's not just a technology innovation. It's literally a workplace transformation. And so keep in mind, the small and medium-sized business community, having a sophisticated HR function is a combination of technology and an incredible amount of services. Just think of everything an HR department does for a large company, we do for thousands and thousands of small businesses and hundreds of thousands of people. So it's the surface need is very high, and it's -- we believe it's escalating and being stepping up to a degree. And it's perfect timing because our capability has also been boosted dramatically through our own internal tools, our internal capabilities.

And we're ramping up on how AI can affect our service delivery. So I think that's really important to note that. And it's -- we really think that our customer base, putting them in the right solution for whatever their highest level of needs are at the time is the right way to go. And that's our game plan.

Brendan Biles

That's awesome. Yes, that's perfect. My follow-up is on OpEx as it relates to compensation, down 5% also and the profitability up, obviously, huge year-over-year. How should we think about compensation. Moving forward, as the sales pipeline fills up and then some of these deals maybe move into implementation and just thinking about growth on a steadier basis as we get to reuse margin recovery initiatives, which have proven pretty successful. How should we think about that maybe flowing into compensation and OpEx?

James Allison

So the we obviously adjusted our head count levels earlier this year in conjunction with kind of rightsizing to the size of the business that we had and our relative priorities. So you do have a little bit of a reset that happened there. We're seeing the benefit of that as we look year-over-year going through this year we're always going to keep in mind kind of where we are and the trajectory of the business from a growth perspective.

But we also see the opportunity as we get back on track with profit recovery, with activity and sales, recognizing that the adjustments that we made allow for some reinvestment as we see growth reemerge from here. So we're in this period, especially around year-end. Where the specifics of exactly what we're planning on for next year, but we're trying to be a thing we agile on that front.

Paul Sarvadi

Yes, I would just add to that and I kind of mentioned in the call was that -- there's still a wide range of possibilities related to year-end transition, simply because we're still focused on the margin recovery effort, but we are getting the activity level right, and we are making good progress there. But there's a lot of churn at year-end, and so that's just part of when the model works. But as far as looking ahead, we are positioned to regain growth momentum. We're starting by regaining the sales activity levels that make that happen. And so as we look across next year, we see growth coming back, but it's growth on top of whatever the starting point turns out to be.

In that part, there's a wide range of possibilities that you can't pin down yet. So for the long term, we really feel great about what we're doing just like we were focused on margin recovery, we've executed that plan. We know what to do to regain growth momentum and that plan is underway. But those two things work together and we are set up to really balance that growth and profitability for 2027.

Operator

Thank you. As we have no further questions on the line at this time, I would like to turn the call back over to Mr. Sarvadi for any closing remarks.

Paul Sarvadi

Well, once again, we just want to thank everyone for your interest in participating today, and we are truly excited about where we stand today, our setup to finish this year effectively and how we're ready to launch into 2027 balancing growth and profitability. So thank you again, and we will see you next time.

Operator

Thank you. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.