Barrett Business Services Inc.: Q4 FY2025 earnings call

What management said about Q4 FY2025, from the documents filed with the SEC on 25 February 2026: press release. Guidance figures: 3 new, 1 kept. The quarter’s numbers.

Key takeaways

Fourth-quarter revenue rose 5%: Fourth-quarter revenues were $321.1 million, up from $304.8 million a year earlier. Source
Full-year gross billings rose 9%: Full-year gross billings rose 9% to $9.04 billion from $8.33 billion in 2024. Source
PEO revenue rose in both periods: Professional employer services revenue was $303.6 million in the fourth quarter, up from $284.5 million, and $1.17 billion for the year, up from $1.06 billion. Source
Same-customer sales moderated in quarter: Management said fourth-quarter same-customer sales trends moderated, and that revenue came in slightly below its expectations. Source
Gross margin ratio lower year over year: Gross margin was 2.8% of gross billings in the fourth quarter against 3.2%, and 2.9% for the year against 3.0%. Source
Cash and investments rose to $157.2M: Unrestricted cash and investments were $157.2 million at year end, against $121.9 million a year earlier, and the company remained debt free. Source
Fourth-quarter buybacks of $17 million: The company repurchased 450,492 shares for $17 million in the fourth quarter under the August 2025 program, leaving about $75 million available. Source

“While fourth quarter same-customer sales trends moderated and revenue came in slightly below our expectations, our ability to drive new client wins and achieve 93% benefits retention reflects the strength of our client value proposition.”
Gary Kramer, President and CEO of BBSI

Guidance

Area	Period	Figure	Against last quarter
Gross billings growth Source	2026	3% to 5%	New
Growth in average WSEs Source	2026	2% to 4%	New
Gross margin as percent of gross billings Source	2026	2.70% to 2.85%	New
Effective annual tax rate Source	2026	26% to 27%	Kept

What changed from last quarter

New guidance: The company issued 2026 guidance for gross billings, average WSEs, gross margin and tax rate. The third-quarter release gave 2025 guidance. Source
Guidance kept: The effective annual tax rate range of 26% to 27% matches the range the third-quarter release gave for 2025. Source
New: The company described a 2026 technology roadmap with several new IT product launches. The third-quarter release did not mention these. Source

Results and growth drivers

Fourth-quarter revenue rose 5%: Fourth-quarter revenues were $321.1 million, up from $304.8 million a year earlier. Source
Full-year gross billings rose 9%: Full-year gross billings rose 9% to $9.04 billion from $8.33 billion in 2024. Source
Full-year net income and EPS rose: Full-year net income rose 3% to $54.4 million, or $2.08 per diluted share, from $53.0 million, or $1.98 per diluted share, in 2024. Source
Quarterly net income lower, EPS higher: Fourth-quarter net income was $16.4 million against $16.8 million, while diluted EPS rose 2% to $0.64 from $0.63. Source

PEO and staffing revenue

PEO revenue rose in both periods: Professional employer services revenue was $303.6 million in the fourth quarter, up from $284.5 million, and $1.17 billion for the year, up from $1.06 billion. Source
Staffing revenue declined: Staffing services revenue was $17.6 million in the fourth quarter against $20.3 million, and $72.0 million for the year against $81.1 million. Source
Total revenue by period: Total revenues were $321.1 million in the fourth quarter and $1.24 billion for 2025, against $304.8 million and $1.14 billion a year earlier. Source

“As we enter 2026, we remain focused on disciplined growth, operational execution, and navigating evolving workers’ compensation market dynamics to position BBSI for continued long-term success.”
Gary Kramer, President and CEO of BBSI

Demand and client trends

Same-customer sales moderated in quarter: Management said fourth-quarter same-customer sales trends moderated, and that revenue came in slightly below its expectations. Source
New client wins and retention cited: Management pointed to new client wins and 93% benefits retention as reflecting the strength of its client value proposition. Source
Net new clients drove WSE growth: Management attributed billings growth to PEO services, from increased WSEs from net new clients and higher average billings per WSE per day. Source

Costs, margins and workers' compensation

Quarterly workers' compensation share steady: Workers' compensation expense was 2.3% of gross billings in the fourth quarter, with $2.2 million of favorable prior-year liability and premium adjustments. Source
Full-year favorable adjustments of $18.7M: Full-year workers' compensation expense was 2.3% of gross billings, down from 2.4%, with favorable prior-year adjustments of $18.7 million. Source
Gross margin ratio lower year over year: Gross margin was 2.8% of gross billings in the fourth quarter against 3.2%, and 2.9% for the year against 3.0%. Source
Payroll taxes and benefits share higher: Payroll taxes and benefits were 7.7% of gross billings in the fourth quarter, against 7.3%, and 7.9% for the year, against 7.6%. Source
Gross margin dollars and SG&A declined: Gross margin dollars were $68.3 million in the fourth quarter against $71.4 million, and SG&A expenses were $47.6 million against $48.8 million. Source

“BBSI closed 2025 with another quarter of solid execution, finishing in line with our earnings expectations and delivering one of our strongest years of controllable growth in recent history”
Gary Kramer, President and CEO of BBSI

Liquidity, capital and shareholder returns

Cash and investments rose to $157.2M: Unrestricted cash and investments were $157.2 million at year end, against $121.9 million a year earlier, and the company remained debt free. Source
Fourth-quarter buybacks of $17 million: The company repurchased 450,492 shares for $17 million in the fourth quarter under the August 2025 program, leaving about $75 million available. Source
Capital returned above $50 million: The company paid $2.0 million of dividends in the quarter. Year-to-date capital returned through buybacks and dividends totaled more than $50 million. Source
Quarterly dividend held at $0.08: The board confirmed the next regular quarterly cash dividend at $0.08 per share. Source
Year-end balance sheet totals: Total assets were $779.1 million and stockholders' equity was $241.0 million at December 31, 2025. Source

Technology, market dynamics and leadership

New IT launches planned for 2026: Management said it plans to advance its technology roadmap in 2026, including several new IT product launches meant to strengthen its service model. Source
Workers' compensation market dynamics noted: Management said it is focused on disciplined growth and operational execution while navigating evolving workers' compensation market dynamics. Source
Results call hosted by CEO and CFO: Gary Kramer and Anthony Harris were scheduled to host the conference call on February 25, 2026, at 5:00 p.m. Eastern time. Source

Coming up, as management said on 25 February 2026

New IT product launches in 2026: Management said it expects several new IT product launches during 2026 as part of its technology roadmap. Source
Cash dividend payable March 27, 2026: The $0.08 quarterly cash dividend will be paid on March 27, 2026, to holders of record as of March 13, 2026. Source

Figures management reported

Figure	Reported
Average WSEs, fourth quarter Source	139,944, up 5.1%
Ending WSEs, December 31 Source	138,605, up 4.9%
Average WSEs, full year Source	138,218, up 6.7%
PEO clients Source	More than 8,200
Gross billings, fourth quarter Source	$2.40 billion, up 6%

Risks management discussed

Demand: Management said fourth-quarter same-customer sales trends moderated. Source
External: Management cited evolving workers' compensation market dynamics that the company is navigating in 2026. Source

Earlier plans management reported on

Met: Management said 2025 finished in line with its earnings expectations. Source
Missed: Management said fourth-quarter revenue came in slightly below its expectations. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

BBSI Reports Strong Fourth Quarter and Full Year 2025 Financial Results

Fourth Quarter Revenues up 5% to $321.1 Million With Net Income of $16.4 Million, or $0.64 per Diluted Share -

VANCOUVER, Washington, February 25, 2026 - Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the fourth quarter and full year ended December 31, 2025.

Fourth Quarter 2025 Financial Summary vs. Year-ago Quarter

Revenues up 5% to $321.1 million.

Gross billings up 6% to $2.40 billion.

Average worksite employees (“WSEs”) up 5%.

Net income of $16.4 million compared to $16.8 million.

Diluted earnings per share up 2% to $0.64 compared to $0.63.

Full Year 2025 Financial Summary vs. 2024

Revenues up 8% to $1.24 billion.

Gross billings up 9% to $9.04 billion.

Average WSEs up 7%.

Net income up 3% to $54.4 million compared to $53.0 million.

Diluted earnings per share up 5% to $2.08 compared to $1.98.

“BBSI closed 2025 with another quarter of solid execution, finishing in line with our earnings expectations and delivering one of our strongest years of controllable growth in recent history,” said Gary Kramer, President and CEO of BBSI. “While fourth quarter same-customer sales trends moderated and revenue came in slightly below our expectations, our ability to drive new client wins and achieve 93% benefits retention reflects the strength of our client value proposition. As we enter 2026, we remain focused on disciplined growth, operational execution, and navigating evolving workers’ compensation market dynamics to position BBSI for continued long-term success. We are also looking forward to advancing our technology roadmap in 2026, including several new IT product launches designed to strengthen our service model.”

Fourth Quarter 2025 Financial Results

Revenues in the fourth quarter of 2025 increased 5% to $321.1 million compared to $304.8 million in the fourth quarter of 2024.

Total gross billings in the fourth quarter increased 6% to $2.40 billion compared to $2.25 billion in the same year-ago quarter (see “Key Performance Metrics” below). The increase was driven by growth in professional employer (“PEO”) services, primarily resulting from increased WSEs from net new clients, as well as higher average billings per WSE per day.

Workers’ compensation expense as a percent of gross billings was 2.3% in the fourth quarter of 2025 and benefited from lower workers’ compensation costs, including favorable prior year liability and premium adjustments of $2.2 million. This compares to 2.3% in the fourth quarter of 2024, which included favorable prior year liability and premium adjustments of $2.4 million.

Net income for the fourth quarter of 2025 was $16.4 million compared to $16.8 million in the year-ago quarter. Diluted earnings per share increased 2% to $0.64 compared to $0.63 in the year-ago quarter.

Full Year 2025 Financial Results

Revenues in 2025 increased 8% to $1.24 billion compared to $1.14 billion in 2024.

Total gross billings in 2025 increased 9% to $9.04 billion compared to $8.33 billion in 2024 (see “Key Performance Metrics” below). The increase was driven by growth in PEO services, primarily resulting from increased WSEs from net new clients, as well as higher average billings per WSE per day.

Workers’ compensation expense as a percent of gross billings was 2.3% in 2025 and benefited from lower workers’ compensation costs, including favorable prior year liability and premium adjustments of $18.7 million. This compares to 2.4% in 2024, which included favorable prior year liability and premium adjustments of $18.5 million.

Net income in 2025 increased 3% to $54.4 million, or $2.08 per diluted share, compared to net income of $53.0 million, or $1.98 per diluted share, in 2024.

Liquidity

As of December 31, 2025, unrestricted cash and investments were $157.2 million compared to $121.9 million at December 31, 2024. BBSI remained debt free at year end.

Capital Allocation

Continuing under the Company’s stock repurchase program established in August 2025, BBSI repurchased $17 million of stock in the fourth quarter comprising 450,492 shares at an average price of $37.80. At December 31, 2025, approximately $75 million remained available under the $100 million repurchase program.

The Company paid $2.0 million of dividends in the quarter, and BBSI’s board of directors confirmed its next regular quarterly cash dividend at $0.08 per share. The cash dividend will be paid on March 27, 2026, to all stockholders of record as of March 13, 2026.

Through a combination of stock repurchases and dividends, year-to-date capital returned to shareholders totaled more than $50 million.

Outlook

In 2026, BBSI expects the following:

Gross billings growth of 3% to 5%.

Growth in the average number of WSEs of 2% to 4%.

Gross margin as a percent of gross billings of 2.70% to 2.85%.

Effective annual tax rate of 26% to 27%.

Conference Call

BBSI will conduct a conference call on Wednesday, February 25, 2026, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the fourth quarter and full year ended December 31, 2025.

BBSI’s CEO Gary Kramer and CFO Anthony Harris will host the conference call, followed by a question and answer period.

Date: Wednesday, February 25, 2026 Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time) Toll-free dial-in number: 1-800-717-1738 International dial-in number: 1-646-307-1865 Conference ID: 1197652

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the Investors section of the BBSI website at ir.bbsi.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through March 25, 2026.

Toll-free replay number: 1-844-512-2921 International replay number: 1-412-317-6671 Replay ID: 1197652

Key Performance Metrics

We report PEO revenues net of direct payroll costs because we are not the primary obligor for wage payments to our clients’ employees. However, management believes that gross billings and wages are useful in understanding the volume of our business activity and serve as important performance metrics in managing our operations, including the preparation of internal operating forecasts and establishing executive compensation performance goals. We therefore present for purposes of analysis gross billings and wage information for the three and twelve months ended December 31, 2025 and 2024.

	(Unaudited)		(Unaudited)
	Three Months Ended December 31,		Year Ended December 31,
(in thousands)	2025	2024	2025	2024
Gross billings	$2,397,139	$2,251,997	$9,042,132	$8,327,091
PEO and staffing wages	$2,089,388	$1,964,001	$7,856,320	$7,245,093

In monitoring and evaluating the performance of our operations, management also reviews the following ratios, which represent selected amounts as a percentage of gross billings. Management believes these ratios are useful in understanding the efficiency and profitability of our service offerings.

	(Unaudited)		(Unaudited)
	Percentage of Gross Billings		Percentage of Gross Billings
	Three Months Ended December 31,		Year Ended December 31,
	2025	2024	2025	2024
PEO and staffing wages	87.2%	87.2%	86.9%	87.0%
Payroll taxes and benefits	7.7%	7.3%	7.9%	7.6%
Workers' compensation	2.3%	2.3%	2.3%	2.4%
Gross margin	2.8%	3.2%	2.9%	3.0%

We refer to employees of our PEO clients as WSEs. Management reviews average and ending WSE growth to monitor and evaluate the performance of our operations. Average WSEs are calculated by dividing the number of unique individuals paid in each month by the number of months in the period. Ending WSEs represents the number of unique individuals paid in the last month of the period.

	(Unaudited)
	Three Months Ended December 31,
	2025	Year-over-year % Growth	2024	Year-over-year % Growth	2023
Average WSEs	139,944	5.1%	133,124	5.2%	126,492
Ending WSEs	138,605	4.9%	132,069	4.4%	126,446

	(Unaudited)
	Year Ended December 31,
	2025	Year-over-year % Growth	2024	Year-over-year % Growth	2023
Average WSEs	138,218	6.7%	129,577	4.2%	124,306
Ending WSEs	138,605	4.9%	132,069	4.4%	126,446

About BBSI

BBSI (NASDAQ: BBSI) is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create a unique operational platform that differentiates it from competitors. The Company’s integrated platform is built upon expertise in payroll processing, employee benefits, workers’ compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI’s partnerships help businesses of all sizes improve the efficiency of their operations. The company works with more than 8,200 PEO clients in all 50 states. For more information, please visit www.bbsi.com.

Forward-Looking Statements

Forward-looking statements notice

Statements in this release about future events and financial outlook are forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could affect future results include: our ability to retain current clients and attract new clients; technology disruption, including the displacement of employees through the adoption of AI and automation by our clients; difficulties associated with integrating clients into our operations; economic trends in the Company’s service areas and the potential effects of changing governmental policies, including those related to immigration, tariffs, other trade policies, or climate regulation; risks to our business and the business of our clients arising from current or future tariffs or other trade restrictions, supply chain issues, changes in labor force, or geopolitical instability, including the war in Ukraine, conflicts in the Middle East, and the potential for future conflicts or disruptions in other parts of the world; natural disasters; the potential for material deviations from expected future workers’ compensation claims experience; changes in the workers’ compensation regulatory environment in the Company’s primary markets; PEO client benefit costs, particularly with regard to health insurance benefits; security breaches or failures in the Company’s information technology systems; collectability of accounts receivable; changes in executive management; changes in effective payroll tax rates and federal and state income tax rates; the carrying values of deferred income tax assets and goodwill (which may be affected by our future operating results); the effects of inflation on our operating expenses and those of our clients; the impact of and potential changes to the Patient Protection and Affordable Care Act, escalating medical costs, and other health care legislative initiatives on our business; the effect of changing monetary policy, interest rates and conditions in the global capital markets on the Company’s investment portfolio; and the availability of capital, borrowing capacity on our revolving credit facility, or letters of credit necessary to meet state-mandated surety deposit requirements for maintaining our status as a qualified self-insured employer for workers' compensation coverage or our insured program. Other important factors that may affect the Company’s prospects are described in the Company’s 2024 Annual Report on Form 10-K and in subsequent reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. Although forward-looking statements help to provide complete information about the Company, readers should keep in mind that forward-looking statements are less reliable than historical information. The Company undertakes no obligation to update or revise forward-looking statements in this release to reflect events or changes in circumstances that occur after the date of this release.

Barrett Business Services, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	December 31,	December 31,
(in thousands)	2025	2024
ASSETS
Current assets:
Cash and cash equivalents	$95,033	$55,367
Investments	62,154	66,492
Trade accounts receivable, net	248,626	234,533
Income taxes receivable	2,965	2,662
Prepaid expenses and other	18,652	18,698
Restricted cash and investments	97,210	97,690
Total current assets	524,640	475,442
Property, equipment and software, net	67,230	56,781
Operating lease right-of-use assets	23,218	20,329
Restricted cash and investments	106,216	134,454
Goodwill	47,820	47,820
Other assets	9,869	6,205
Deferred income taxes	74	4,477
Total assets	$779,067	$745,508
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$7,433	$6,787
Accrued payroll and related benefits	237,783	215,648
Payroll taxes payable	62,463	49,685
Current operating lease liabilities	6,969	6,231
Current premium payable	38,992	31,134
Other accrued liabilities	19,357	10,330
Workers' compensation claims liabilities	32,875	39,081
Total current liabilities	405,872	358,896
Long-term workers' compensation claims liabilities	75,709	89,365
Long-term premium payable	26,025	49,840
Long-term operating lease liabilities	17,484	15,215
Customer deposits and other long-term liabilities	12,977	10,788
Stockholders' equity	241,000	221,404
Total liabilities and stockholders' equity	$779,067	$745,508

Barrett Business Services, Inc.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended		Year Ended
	December 31,		December 31,
(in thousands, except per share amounts)	2025	2024	2025	2024
Revenues:
Professional employer services	$303,553	$284,517	$1,168,334	$1,063,386
Staffing services	17,573	20,303	71,964	81,145
Total revenues	321,126	304,820	1,240,298	1,144,531
Cost of revenues:
Direct payroll costs	13,368	15,392	54,443	61,010
Payroll taxes and benefits	184,245	163,720	720,798	628,534
Workers' compensation	55,248	54,333	204,144	201,736
Total cost of revenues	252,861	233,445	979,385	891,280
Gross margin	68,265	71,375	260,913	253,251
Selling, general and administrative expenses	47,582	48,818	190,494	185,869
Depreciation and amortization	2,163	1,938	8,256	7,601
Income from operations	18,520	20,619	62,163	59,781
Other income (expense):
Investment income, net	2,356	2,522	9,259	11,130
Interest expense	(38)	(45)	(171)	(178)
Other, net	17	(35)	148	89
Other income, net	2,335	2,442	9,236	11,041
Income before income taxes	20,855	23,061	71,399	70,822
Provision for income taxes	4,459	6,261	16,951	17,829
Net income	$16,396	$16,800	$54,448	$52,993
Basic income per common share	$0.65	$0.65	$2.13	$2.03
Weighted average number of basic common shares outstanding	25,362	25,907	25,613	26,076
Diluted income per common share	$0.64	$0.63	$2.08	$1.98
Weighted average number of diluted common shares outstanding	25,777	26,626	26,141	26,708

Contacts
Gateway Group, Inc.
Cody Slach
Tel 1-949-574-3860
BBSI@gateway-grp.com