Insperity, Inc. (NSP): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of Insperity, Inc.'s portfolio, so let's map their business segments onto the four quadrants of the Boston Consulting Group Matrix for 2025. The picture shows a solid core, with the massive $6.85 billion revenue stream acting as a reliable Cash Cow, supported by the high-growth Premium PEO offering maintaining a near-perfect 99% client retention rate as a Star. However, we can't ignore the headwinds; unmanaged benefits costs are dragging down margins, leading to a -$0.20 adjusted EPS loss in Q3, clearly marking some offerings as Dogs. The real intrigue lies in the $58 million bet on the new HRScale solution with Workday-a classic Question Mark that could defintely define the next growth chapter. Dive in to see exactly where you should be focusing your attention on Insperity, Inc.'s current structure.

Background of Insperity, Inc. (NSP)

You're looking at Insperity, Inc. (NSP) as of late 2025, and the story right now is one of top-line stability battling severe margin pressure. Insperity, Inc. is a key player in the Professional Employer Organization (PEO) space, providing comprehensive human resources outsourcing services to small and medium-sized businesses across the United States. They handle the heavy lifting-payroll processing, benefits administration, talent management, and compliance-so their clients can focus on their actual business operations. This PEO model is their bread and butter, and it's what drives nearly all their revenue.

Let's look at the numbers coming out of the third quarter, which ended September 30, 2025. For Q3 2025, Insperity, Inc. posted revenues of $1.6 billion, marking a 4% increase year-over-year. That growth came from a 1% rise in the average number of paid Worksite Employees (WSEEs), which hit 312,842 for the quarter, combined with a 3% increase in revenue per WSEE due to pricing adjustments. Still, the trailing twelve months (TTM) revenue ending that same date reached $6.76 billion.

However, the profitability picture is tough, which is why you're seeing market nervousness. The primary culprit is unexpectedly high benefits costs, especially healthcare trends and claim activity. This cost spike hammered the gross profit, which fell 15% to $195 million in Q3 2025 compared to the prior year. Consequently, the company reported a net loss of $20 million for the quarter, with an adjusted Earnings Per Share (EPS) loss of $(0.20), missing analyst expectations significantly.

Management is taking action, though, and you need to note these strategic moves. Insperity, Inc. announced an extension of its contract with UnitedHealthcare through 2028, which is designed to bring significant cost savings and lower risk starting January 1, 2026. Also, the official rollout of HRScale, their strategic joint development offering with Workday, is underway, which they hope will be a catalyst for future growth. For the full year 2025, the updated Adjusted EBITDA guidance is now set in a range between $119 million and $153 million.

To keep shareholders happy despite the operational headwinds, Insperity, Inc. is maintaining capital returns. They declared a quarterly dividend of $0.60 per share, which annualizes to $2.40. What this estimate hides, though, is that based on recent earnings, the dividend payout ratio is an unsustainably high 521.74%, so you have to watch cash flow closely to see if that payment is durable. Finance: draft 13-week cash view by Friday to assess dividend sustainability.

Insperity, Inc. (NSP) - BCG Matrix: Stars

You're looking at the business units that are currently driving top-line momentum for Insperity, Inc., the ones operating in the fastest-growing segments where the company holds a leading position. These are the Stars of the portfolio, demanding significant investment to maintain their market share lead in a high-growth environment.

The Insperity HR360 offering, which is now being enhanced by the rollout of the strategic joint development offering with Workday, HRScale, represents this quadrant. While the overall PEO market growth rate is a key driver, the success of this premium, full-suite service is evident in its operational metrics. For instance, client retention for the overall base remained exceptionally high in Q2 2025, reported at 99% per month, which is a key indicator of product stickiness, even as Q1 2025 showed a figure of 91%.

The pricing power associated with these high-value services is translating directly to revenue per client. In the third quarter of 2025, Insperity, Inc. saw revenues of $1,623 million, a 4% increase year-over-year. This growth was fueled by a 3% increase in revenues per Worksite Employee (WSEE) per month, which management attributed to higher pricing on their full-suite offerings. This is a critical metric because, in the PEO model, revenue per WSEE is a direct proxy for the value captured from the service bundle.

Sales efficiency, another hallmark of a Star, shows positive momentum even amid broader economic uncertainty. In the second quarter of 2025, the number of worksite employees paid from new sales increased by 2% year-over-year, a positive signal that the sales force, despite being smaller, is closing higher-value deals more effectively. This contrasts with the modest overall average paid WSEE growth of 0.7% in Q2 2025, which reached 309,115 employees.

Geographically, the Northeast region is clearly outperforming the company average in terms of revenue capture. For Q3 2025, the total company revenue growth was 4%, but the Northeast region reported a 5% increase in revenue. This regional strength suggests that the premium offering is resonating particularly well in that market, or that the market itself is experiencing higher growth than the company average of 1% in average paid WSEEs for Q3 2025.

Here's a look at how the key regions performed in Q3 2025 revenue growth compared to the total company performance:

The operational success supporting the Star status is best summarized by these key performance indicators:

• Q3 2025 Revenue per WSEE increase: 3%.
• Q2 2025 WSEEs from new sales increase: 2%.
• Q2 2025 Monthly Client Retention: 99%.
• Q3 2025 Northeast Revenue Growth: 5%.
• Q3 2025 Total Revenue Growth: 4%.

These units are consuming cash to fuel expansion, as evidenced by the ongoing investment in the Workday partnership, which included $11 million in operating expenses for that initiative in Q3 2025. Still, keeping market share here is the priority, as these are the future Cash Cows if the high-growth PEO market eventually matures.

Insperity, Inc. (NSP) - BCG Matrix: Cash Cows

The Cash Cow quadrant represents the established, market-leading business units that generate significant cash flow with minimal reinvestment needs due to low market growth. For Insperity, Inc., this is the core Professional Employer Organization (PEO) service offering.

The massive, stable base of worksite employees (WSEEs) forms the foundation of this cash generation. For the full year 2025, the company is forecasting average paid WSEEs to be in the range of $310,200 to $310,700. The year-to-date average paid WSEEs through Q3 2025 stood at 309,327.

This volume supports the core PEO revenue stream, which is expected to generate full-year 2025 revenue of approximately $6.85 billion based on consensus estimates. The trailing twelve months revenue ending September 30, 2025, was $6.76 billion. This predictable revenue is derived from long-term, low-risk PEO contracts that provide consistent payroll and administrative fee revenue.

The stability of this unit is further evidenced by the consistent capital return to shareholders. Insperity, Inc. returned $87 million to shareholders through dividends and share repurchases in the first nine months of 2025. This return comprised $68 million in cash dividends and $19 million used to repurchase 225,000 shares.

The PEO model, while mature, continues to deliver substantial top-line results, even amid margin pressures from benefits costs. The Q3 2025 revenue was $1.62 billion, representing a 4.0% increase year-over-year. The full-year 2025 adjusted EBITDA guidance remains in the range of $119 million to $153 million.

Here is a snapshot of the key financial metrics supporting the Cash Cow classification for Insperity, Inc. as of the latest reported data:

The low-risk nature of the PEO model means that investments are focused on efficiency rather than market expansion, which helps maximize the cash flow extracted from this segment. The company is supporting infrastructure, such as the strategic partnership investment related to Workday, which for full-year 2025 is expected to total approximately $58 million, with $48 million included in operating expenses.

The characteristics of this segment align with the Cash Cow mandate:

• The massive, stable base of worksite employees (WSEEs), averaging over 310,000 for the full year 2025.
• Core PEO revenue stream, which is expected to generate full-year 2025 revenue of approximately $6.85 billion (consensus estimate).
• Consistent capital return to shareholders, with $87 million returned through dividends and share repurchases in the first nine months of 2025.
• The long-term, low-risk PEO model that provides predictable payroll and administrative fee revenue.

The focus here is maintaining the current level of productivity to continue milking the gains passively. Finance: draft 13-week cash view by Friday.

Insperity, Inc. (NSP) - BCG Matrix: Dogs

You're looking at the parts of Insperity, Inc. (NSP) that are tying up capital without delivering the returns you expect from a market leader. These are the units stuck in low-growth markets with low market share, and honestly, they are prime candidates for divestiture because expensive turn-around plans rarely pay off here.

The primary pressure point defining these Dogs in 2025 is the unmanaged benefits cost program. The impact was stark in the third quarter of 2025: Insperity, Inc. posted an adjusted Earnings Per Share (EPS) loss of -$0.20, missing consensus estimates of $0.22. This loss directly correlates with the severe margin compression seen in the period.

The financial evidence of this margin erosion is clear when you look at the gross profit metrics for Q3 2025:

This profitability squeeze is rooted in the exposure to elevated healthcare cost trends. For the full year 2025, management noted the benefits cost trend was projected to be high, with the Q3 2025 year-over-year increase hitting 9.1%. Even in Q1 2025, the increase was 8.4% year-over-year. This trend is what forced management to slash the full-year 2025 Adjusted EPS guidance to a range of $0.84 to $1.47, down from prior expectations up to $2.51.

The legacy, low-margin Administrative Services Organization (ASO) offerings, which Insperity, Inc. now brands as Insperity HRCore (formerly Workforce Synchronization), represent the units with lower strategic value and growth potential compared to the flagship Insperity HR360 and the future-focused Insperity HRScale (the Workday joint solution). These older, less differentiated services struggle to absorb the cost inflation.

Even with assertive actions, the segment of the client base where pricing adjustments have not yet fully offset the higher-than-expected claims costs is evident in the top-line metrics. While average paid Worksite Employees (WSEEs) grew 1% to 312,842 in Q3 2025, and revenue per WSEE per month rose 3%, the resulting gross profit fell 15%. This mismatch-modest revenue growth failing to cover soaring direct costs-is the definition of a Dog in this environment. The Q3 2025 Operating Loss of $(25) million confirms that the core service delivery is not covering its direct expenses effectively.

You should be tracking these specific indicators of underperformance:

• Q3 2025 Adjusted EPS: -$0.20.
• Full Year 2025 Adjusted EBITDA Guidance Range: $119 million to $153 million.
• Q3 2025 Operating Income (Loss): $(25) million.
• Benefits Cost Trend (Q3 2025 YoY): 9.1%.

Finance: draft a scenario analysis on the cash impact of divesting the lowest-margin 10% of the HRCore client base by next Tuesday.

Insperity, Inc. (NSP) - BCG Matrix: Question Marks

You're looking at the new ventures that are consuming cash now but hold the key to Insperity, Inc.'s future market position. These are the Question Marks: high-growth market plays with currently low market share, demanding significant capital before they can become Stars.

The Insperity HRScale solution, developed in partnership with Workday, is the prime example here. It targets the mid-market, a segment Insperity, Inc. is actively trying to capture with this advanced technology blend. While the market potential is high, the product won't be generally available until early adopter customers start using it in 2026. This timing creates a classic Question Mark scenario: investment now for payoff later.

The financial commitment to this future growth is substantial and immediate. Insperity, Inc. is pouring capital into this strategic technology shift, which is why you see the drag on current profitability. The total expected investment for the Workday strategic partnership in the full year 2025 is approximately $58 million, with $48 million of that amount being included in operating expenses. To put that in perspective for the third quarter alone, operating expenses included $11 million for the partnership, which is a significant spend when Q3 adjusted EBITDA was only $10 million.

Here's a quick look at the investment and operational context for these growth bets:

The growth in the existing client base, which drives revenue for the established products, is also volatile and needs close watching. You can't build a Star business on weak underlying client growth. For instance, net hiring within the client base was negative in the third quarter, similar to last year, due to the departure of seasonal summer employees. Still, the overall hiring environment in Q3 2025 was slightly weaker than in Q3 2024. Client retention remains high, which is a positive sign for the core business, holding steady at 99% per month in Q3.

The new UnitedHealthcare contract is a major strategic move to de-risk the core service offering, which is currently suffering from high medical costs. This is a high-stakes play because the financial benefit isn't immediate, but the long-term risk reduction is critical for future margin recovery. The contract is extended through 2028, but the real financial shift happens on January 1, 2026, when the pooling level for large claims drops to $500,000. This is designed to offset the elevated benefits cost trend, which for the full year 2025 is expected to be 9.1% over 2024 levels. The pressure from these costs is clear:

• Q3 2025 gross profit decreased 15% year-over-year to $195 million.
• Higher-than-expected benefits costs were the primary driver, totaling an extra $20 million in Q3 2025.
• The structure of the new agreement is paramount as management expects it to enhance the financial impact in subsequent years.

Finance: draft 13-week cash view by Friday.