Barrett Business Services Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 5 August 2026: press release. Guidance figures: 3 narrowed, 1 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Revenue and billings both grew: Revenues rose 4% to $319.3 million from $307.7 million, and gross billings rose 3% to $2.29 billion from $2.23 billion. Source
• Net income declined year over year: Net income was $12.9 million, or $0.52 per diluted share, against $18.5 million, or $0.70 per diluted share, a year earlier. Source
• Client hiring cited as main headwind: Management said softness in client hiring is the primary growth headwind, and the expected recovery has not yet appeared. Source
• Gross margin fell to 2.8% of billings: Gross margin was $64.9 million, or 2.8% of gross billings, against $73.3 million, or 3.3%. For the six months it was 2.4% against 2.7%. Source
• Workers' compensation rose to 2.5%: Workers' compensation expense was 2.5% of gross billings, including $2.0 million of favorable prior-year adjustments, against 2.1% and $8.8 million a year earlier. Source
• First-quarter tax charge excluded from non-GAAP: The $11.6 million tax-effected charge related to disallowed wage-based tax credits from prior years and is excluded from non-GAAP measures. Source
• Bought back $15.0 million of stock: BBSI bought 486,811 shares at an average $30.92 under the August 2025 program. Year-to-date capital returned through buybacks and dividends totaled more than $39 million. Source

“BBSI delivered second quarter results in line with the trends we've been communicating”

Gary Kramer, President and CEO of BBSI

Guidance

What changed from last quarter

• Guidance lowered: Gross billings growth range narrowed to 3% to 4%, from 3% to 5%. Source
• Guidance lowered: Average WSE growth range narrowed to 2% to 3%, from 2% to 4%. Source
• Guidance lowered: Gross margin range top end reduced to 2.75% of billings, from 2.85%; the bottom stays at 2.70%. Source
• Guidance kept: Tax rate range kept at 26% to 27%; the range is now stated as excluding the one-time prior-year tax credit charge. Source

Results and growth drivers

• Revenue and billings both grew: Revenues rose 4% to $319.3 million from $307.7 million, and gross billings rose 3% to $2.29 billion from $2.23 billion. Source
• Net income declined year over year: Net income was $12.9 million, or $0.52 per diluted share, against $18.5 million, or $0.70 per diluted share, a year earlier. Source
• Operating income fell on flat overhead: SG&A was $47.2 million against $48.2 million a year earlier. Income from operations was $15.4 million, down from $23.0 million. Source

Segments and revenue mix

• PEO services revenue rose: Professional employer services revenue was $305.0 million, up from $290.2 million a year earlier. Source
• Staffing revenue declined: Staffing services revenue was $14.3 million, compared with $17.5 million in the year-ago quarter. Source
• Six-month billings reached $4.45 billion: Gross billings for the six months were $4.45 billion, up from $4.32 billion. Six-month PEO and staffing wages were $3.85 billion against $3.75 billion. Source

“We continue to view 2026 as the low point for margin as our cumulative pricing actions continue to build in the periods ahead.”

Gary Kramer, President and CEO of BBSI

Workforce, clients and demand

• Six-month WSE growth was 1.2%: Average WSEs for the six months were 137,353, up 1.2% from 135,714, against 7.8% growth in the prior-year six months. Source
• Quarterly WSE growth was 0.5%: Average WSEs grew 0.5% in the quarter and ending WSEs 0.6%, compared with 8.0% and 8.2% growth in the year-ago quarter. Source
• Net new clients drove billings growth: Management attributed billings growth to PEO services, primarily from increased WSEs from net new clients, and to higher average billings per WSE per day. Source
• Client hiring cited as main headwind: Management said softness in client hiring is the primary growth headwind, and the expected recovery has not yet appeared. Source

Costs, margins and pricing

• Gross margin fell to 2.8% of billings: Gross margin was $64.9 million, or 2.8% of gross billings, against $73.3 million, or 3.3%. For the six months it was 2.4% against 2.7%. Source
• Benefit costs rose to 1.3% of billings: Benefit costs were $28.9 million, or 1.3% of gross billings, against $18.3 million, or 0.8% a year earlier. Source
• Workers' compensation rose to 2.5%: Workers' compensation expense was 2.5% of gross billings, including $2.0 million of favorable prior-year adjustments, against 2.1% and $8.8 million a year earlier. Source
• Client pricing improved through Q2: Management said positive client pricing trends improved through Q2. This was offset by a slowing of favorable prior-year claims adjustments across the industry. Source

“Continued softness in client hiring remains our primary growth headwind and has not yet shown the recovery we had anticipated.”

Gary Kramer, President and CEO of BBSI

Tax charge and earnings adjustments

• First-quarter tax charge excluded from non-GAAP: The $11.6 million tax-effected charge related to disallowed wage-based tax credits from prior years and is excluded from non-GAAP measures. Source
• Six-month GAAP net loss: Six-month GAAP net loss was $1.9 million, or $0.08 per diluted share. Excluding the charge, non-GAAP net income was $9.6 million, or $0.39 per diluted share. Source
• Quarterly tax provision fell: The provision for income taxes was $4.5 million in the quarter, against $6.9 million a year earlier. The six-month provision was $14.8 million against $6.4 million. Source

Capital, cash and shareholder returns

• Unrestricted cash and investments fell: Unrestricted cash and investments were $67.9 million at June 30, against $91.9 million at March 31. The company remained debt free at quarter end. Source
• Bought back $15.0 million of stock: BBSI bought 486,811 shares at an average $30.92 under the August 2025 program. Year-to-date capital returned through buybacks and dividends totaled more than $39 million. Source
• Dividend paid and next set: The company paid $1.9 million of dividends in the quarter and confirmed its next regular quarterly cash dividend at $0.08 per share. Source
• Stockholders' equity declined from year-end: Stockholders' equity was $203.8 million at June 30, against $241.0 million at December 31, 2025. Source

Coming up, as management said on 5 August 2026

• Quarterly dividend payable September 4: The $0.08 per share cash dividend is payable September 4, 2026, to holders of record as of August 21, 2026. Source
• Remaining buyback authority of $40.3 million: Approximately $40.3 million remained available under the $100 million repurchase program at June 30, 2026. The documents give no timing for further repurchases. Source

Figures management reported

Risks management discussed

• Demand: Client hiring softness is the main growth headwind, and the recovery management expected has not yet shown up. Source
• Financial: Favorable prior-year claims adjustments are slowing, which management describes as a trend across the industry. Source

Earlier plans management reported on

• On track: Management said second quarter results were in line with the trends it had been communicating. Source
• Not stated: In the first quarter, management reiterated full-year expectations. The second quarter update revised the guidance ranges.
• Not stated: Management had anticipated a recovery in client hiring that has not yet appeared in the quarter's results. Source

Other quarters

• Q3 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 results

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.