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Insperity revenue rises 9% in Q4, gross margin narrows

February 12, 2016

Professional employer organization Insperity Inc. (NYSE: NSP) reported revenue rose 9.1% in the fourth quarter to $650.0 million.

The average number of worksite employees paid per month in the quarter rose 12.0% year over year. Worksite employees paid from new client sales increased 25% from the fourth quarter of 2014, and worksite employee retention remained above 99%.

Insperity also repurchased more than 3 million shares of stock in an offer that ended in January. Total transaction costs for the company were $144.2 million.

(US$ thousands) Q4 2015 Q4 2014 % growth
Revenue $650,011 $595,865 9.1%
Gross profit $97,045 $101,359 -4.3%
Gross margin 14.9% 17.0%  
Net income $6,339 $8,164 -22.4%

Quote

“Over the quarter, we continued to effectively manage our direct cost programs such that the underlying trends in our unemployment tax area, workers’ compensation and benefit programs position us well for 2016,” CFO Douglas Sharp said in a conference call with analysts. “However, we experienced unusually high large-claim medical costs during the quarter, including two claims totaling approximately $2.4 million. In total, large-claim costs came in approximately $5 million in excess of the average of the previous three quarters and resulted in Q4 adjusted EBITDA coming in below expected levels. “

Full-year results

(US$ thousands) 2015 2014 % growth
Revenue $2,603,614 $2,357,788 10.4%
Gross profit $437,867 $403,805  
Gross margin 16.8% 17.1%  
Net income $39,390 $28,004 40.7%

Share price and market cap

Insperity shares rose 3.92% in early afternoon trading to $44.27 and the company had a market cap of approximately $1.07 billion, according to Yahoo!