Third quarter 2026
Filed Nov 4, 2026Third-quarter revenues increased 5% to $334.1 million and gross billings increased 3% to $2.40 billion, while net income was $16.8 million compared to $20.6 million in the year-ago quarter.
Revenue, gross billings and average WSEs increased, supported by PEO client growth and higher average billings per WSE per day. However, gross margin as a percentage of gross billings was 3.0% versus 3.3%, and GAAP net income was $16.8 million versus $20.6 million.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenues, three months ended September 30, 2026GAAP | $334.1M | – | 5% |
| Professional employer services revenues, three months ended September 30, 2026GAAP | $316.2M | – | – |
| Staffing services revenues, three months ended September 30, 2026GAAP | $17.85M | – | – |
| Total cost of revenues, three months ended September 30, 2026GAAP | $261.4M | – | – |
| Direct payroll costs, three months ended September 30, 2026GAAP | $13.62M | – | – |
| Payroll taxes, three months ended September 30, 2026GAAP | $160.7M | – | – |
| Benefit costs, three months ended September 30, 2026GAAP | $29.10M | – | – |
| Workers' compensation expense, three months ended September 30, 2026GAAP | $57.92M | – | – |
| Gross margin, three months ended September 30, 2026GAAP | $72.67M | – | – |
| Gross margin as a percentage of gross billings, three months ended September 30, 2026other | 3.0% | – | – |
| Selling, general and administrative expenses, three months ended September 30, 2026GAAP | $48.88M | – | – |
| Depreciation and amortization, three months ended September 30, 2026GAAP | $2.56M | – | – |
| Income from operations, three months ended September 30, 2026GAAP | $21.23M | – | – |
| Other income, net, three months ended September 30, 2026GAAP | $1.30M | – | – |
| Income before income taxes, three months ended September 30, 2026GAAP | $22.53M | – | – |
| Provision for income taxes, three months ended September 30, 2026GAAP | $5.78M | – | – |
| Net income, three months ended September 30, 2026GAAP | $16.8M | – | – |
| Basic income per common share, three months ended September 30, 2026GAAP | $0.69 | – | – |
| Diluted income per common share, three months ended September 30, 2026GAAP | $0.69 | – | – |
| Gross billings, three months ended September 30, 2026other | $2.4B | – | 3% |
| PEO and staffing wages, three months ended September 30, 2026other | $2.07B | – | – |
| PEO and staffing wages as a percentage of gross billings, three months ended September 30, 2026other | 86.6% | – | – |
| Payroll taxes as a percentage of gross billings, three months ended September 30, 2026other | 6.7% | – | – |
| Benefit costs as a percentage of gross billings, three months ended September 30, 2026other | 1.3% | – | – |
| Workers' compensation expense as a percentage of gross billings, three months ended September 30, 2026other | 2.4% | – | – |
| Average WSEs, three months ended September 30, 2026other | 142,319 | – | 0.6% |
| Ending WSEs, three months ended September 30, 2026other | 142,020 | – | 1.1% |
| Total revenues, nine months ended September 30, 2026GAAP | $960.3M | – | – |
| Professional employer services revenues, nine months ended September 30, 2026GAAP | $914.2M | – | – |
| Staffing services revenues, nine months ended September 30, 2026GAAP | $46.16M | – | – |
| Total cost of revenues, nine months ended September 30, 2026GAAP | $779.6M | – | – |
| Gross margin, nine months ended September 30, 2026GAAP | $180.7M | – | – |
| Gross margin as a percentage of gross billings, nine months ended September 30, 2026other | 2.6% | – | – |
| Selling, general and administrative expenses, nine months ended September 30, 2026GAAP | $143.6M | – | – |
| Income from operations, nine months ended September 30, 2026GAAP | $30.17M | – | – |
| Net income, nine months ended September 30, 2026GAAP | $14.82M | – | – |
| Diluted income per common share, nine months ended September 30, 2026GAAP | $0.60 | – | – |
| Non-GAAP net income, nine months ended September 30, 2026non-GAAP | $26.38M | – | – |
| Non-GAAP diluted income per share, nine months ended September 30, 2026non-GAAP | $1.06 | – | – |
| Non-recurring tax adjustment, nine months ended September 30, 2026non-GAAP | $11.56M | – | – |
| Gross billings, nine months ended September 30, 2026other | $6.85B | – | – |
| PEO and staffing wages, nine months ended September 30, 2026other | $5.92B | – | – |
| Average WSEs, nine months ended September 30, 2026other | 139,067 | – | 1.0% |
| Ending WSEs, nine months ended September 30, 2026other | 142,020 | – | 1.1% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Professional employer servicesGrowth in professional employer services primarily resulted from increased WSEs from net new clients, as well as higher average billings per WSE per day. | $316.2M | – | – |
| Staffing servicesNot stated. | $17.85M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Calendar-year 2026 outlook
- Gross marginGross margin as a percent of gross billings of 2.70% to 2.75%.
- Tax rateEffective annual tax rate to remain at 26% to 27%, excluding the one-time charge related to prior-year tax credits.
- NoteGross billings growth of 3% to 4%.
- NoteGrowth in the average number of WSEs of 1% to 2%.
Capital returns
- Repurchased $9.0 million of common stock in the third quarter, comprising 273,695 shares at an average price of $33.01.
- Approximately $31.2 million remained available under the $100 million repurchase program at September 30, 2026.
- Paid $1.9 million of dividends in the quarter.
- Board confirmed its next regular quarterly cash dividend at $0.08 per share, payable on December 4, 2026, to stockholders of record as of November 20, 2026.
- Year-to-date capital returned to shareholders totaled more than $50 million through stock repurchases and dividends.
What drove it
- Revenue growth was driven by growth in PEO services.
- The PEO-services increase primarily resulted from increased WSEs from net new clients and higher average billings per WSE per day.
- Workers' compensation expense included favorable prior year liability and premium adjustments of $0.8 million in the third quarter of 2026.
- Management cited improving conditions in the workers' compensation market and its ability to secure rate increases.
Concerns
- Client hiring trends remain soft.
- Gross margin as a percentage of gross billings was 3.0% compared to 3.3% in the year-ago quarter.
- Benefit costs as a percentage of gross billings were 1.3% compared to 0.9%.
- Workers' compensation expense as a percentage of gross billings was 2.4% compared to 2.2%; favorable prior-year liability and premium adjustments were $0.8 million compared to $3.9 million.
- The Company recorded tax-effected charges of $11.6 million during the first quarter of 2026 related to the disallowance of certain wage-based tax credits claimed in prior years.
What to watch
- Progress toward calendar-year 2026 gross billings growth of 3% to 4%.
- Progress toward growth in the average number of WSEs of 1% to 2%.
- Gross margin as a percent of gross billings against the 2.70% to 2.75% outlook.
- Client hiring trends, workers' compensation market conditions, and the Company's ability to secure rate increases.
- The effective annual tax rate outlook of 26% to 27%, excluding the one-time charge related to prior-year tax credits.
Balance sheet and cash flow
- Unrestricted cash and investments were $73.7 million as of September 30, 2026, compared to $67.9 million as of June 30, 2026.
- Cash and cash equivalents were $46,098 (in thousands) as of September 30, 2026, compared to $95,033 (in thousands) as of December 31, 2025.
- Investments were $27,637 (in thousands) as of September 30, 2026, compared to $62,154 (in thousands) as of December 31, 2025.
- BBSI remained debt free at quarter end.
- Trade accounts receivable, net were $328,730 (in thousands) as of September 30, 2026, compared to $248,626 (in thousands) as of December 31, 2025.
- Total assets were $746,583 (in thousands) as of September 30, 2026, compared to $779,067 (in thousands) as of December 31, 2025.
- Stockholders' equity was $207,759 (in thousands) as of September 30, 2026, compared to $241,000 (in thousands) as of December 31, 2025.
Analysis
BBSI reported third-quarter revenue of $334.1 million, up 5% from $318.9 million, and gross billings of $2.40 billion, up 3% from $2.32 billion. The Company attributed the increase to PEO-services growth driven by increased WSEs from net new clients and higher average billings per WSE per day. Average WSEs were 142,319, up 0.6%, while ending WSEs were 142,020, up 1.1%. Management nevertheless stated that client hiring trends remain soft.
The mix of revenue growth and cost performance produced lower gross margin dollars and percentage. Gross margin was $72,671 (in thousands), compared with $76,765 (in thousands), while gross margin as a percentage of gross billings was 3.0% versus 3.3%. Benefit costs represented 1.3% of gross billings versus 0.9%, and workers' compensation represented 2.4% versus 2.2%. The current-quarter workers' compensation result included $0.8 million of favorable prior-year liability and premium adjustments, compared with $3.9 million in the year-ago quarter.
GAAP net income was $16.8 million, or $0.69 per diluted share, compared with $20.6 million, or $0.79 per diluted share. For the nine months ended September 30, 2026, GAAP net income was $14,817 (in thousands), or $0.60 per diluted share. The nine-month result included a tax-effected charge of $11.6 million related to the disallowance of certain wage-based tax credits claimed in prior years. BBSI reported nine-month non-GAAP net income of $26,382 (in thousands), or $1.06 per diluted share, after excluding the $11,565 (in thousands) non-recurring tax adjustment.
Liquidity was $73.7 million of unrestricted cash and investments at September 30, 2026, compared with $67.9 million at June 30, 2026, and the Company stated that it remained debt free. Capital allocation included $9.0 million of third-quarter share repurchases, $1.9 million of dividends paid in the quarter, and more than $50 million of year-to-date capital returned through repurchases and dividends. The outlook calls for gross billings growth of 3% to 4%, average WSE growth of 1% to 2%, gross margin as a percentage of gross billings of 2.70% to 2.75%, and an effective annual tax rate of 26% to 27%, excluding the one-time charge related to prior-year tax credits.
Management, verbatim
BBSI delivered third quarter results in line with our expectations, reflecting continued execution against our controllable growth initiatives and disciplined operational management.
Gary Kramer, President and CEO of BBSI
Although client hiring trends remain soft, we are encouraged by improving conditions in the workers’ compensation market and our continued ability to secure rate increases.
Gary Kramer, President and CEO of BBSI
We remain focused on disciplined growth, delivering value to our clients and strengthening our platform for long-term success.
Gary Kramer, President and CEO of BBSI
Not in the filing
stated, not guessed- Operating cash flow was not reported.
- Free cash flow was not reported.
- Prior-quarter comparisons for the reported income-statement and operating metrics were not reported.
- A prior outlook section was not provided, so comparisons of actual results with prior guidance were not available.
- Quarterly non-GAAP net income and quarterly non-GAAP diluted income per share were not reported.
- Debt balance was not reported; the Company stated that it remained debt free at quarter end.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.