BBSI

Wrapping up Q2 earnings, we look at the numbers and key takeaways for the professional staffing & hr solutions stocks, including Barrett (NASDAQ:BBSI) and its peers. The Professional Staffing & HR Solutions subsector within Business Services is set to benefit from evolving workforce trends, including the rise of remote work and the gig economy. With companies casting a wider net to find talent due to remote work, the expertise of staffing and recruiting companies is even more valuable. For those who invest wisely, the use of predictive AI in recruitment and screening as well as automation in HR workflows can enhance efficiency and scalability. On the other hand, digitization means that talent discovery is less of a manual process, opening the door for tech-first platforms. Additionally, regulatory scrutiny around data privacy in HR is evolving and may require companies in this sector to change their go-to-market strategies over time. The 7 professional staffing & hr solutions stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.3% while next quarter’s revenue guidance was 2% below. In light of this news, share prices of the companies have held steady as they are up 1.7% on average since the latest earnings results. Operating as a professional employer organization (PEO) that serves over 8,000 companies with more than 120,000 worksite employees, Barrett Business Services (NASDAQ:BBSI) provides management solutions that help small and mid-sized businesses handle human resources, payroll, workers' compensation, and other administrative functions. Barrett reported revenues of $319.3 million, up 3.8% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with a significant miss of analysts’ EPS estimates. “BBSI delivered second quarter results in line with the trends we've been communicating, with strong new client additions once again exceeding our expectations," said Gary Kramer, President and CEO of BBSI. Barrett delivered the weakest performance against analyst estimates of the whole group. The market seems disappointed with the results as the stock is down 22.3% since reporting and currently trades at $31.18. Read our full report on Barrett here, it’s free. Founded during the post-World War II economic boom when businesses needed temporary workers, ManpowerGroup (NYSE:MAN) connects millions of people to employment opportunities through its global network of staffing, recruitment, and workforce management services. ManpowerGroup reported revenues of $4.86 billion, up 7.5% year on year, outperforming analysts’ expectations by 2.9%. The business had a stunning quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EPS guidance for next quarter estimates. The market seems happy with the results as the stock is up 44.4% since reporting. It currently trades at $56.36. Is now the time to buy ManpowerGroup? Access our full analysis of the earnings results here, it’s free. Born from a corporate spinoff in 2017 to focus on employee experience technology, Alight (NYSE:ALIT) provides human capital management solutions that help companies administer employee benefits, payroll, and workforce management systems. Alight reported revenues of $511 million, down 3.2% year on year, exceeding analysts’ expectations by 2.8%. Still, it was a slower quarter as it posted revenue guidance for next quarter missing analysts’ expectations significantly. Alight delivered the weakest guidance update, slowest revenue growth, and weakest full-year guidance update among its peers. As expected, the stock is down 16.2% since the results and currently trades at $14.40. Read our full analysis of Alight’s results here. With nearly 60 years of matching skilled professionals with the right opportunities, Kforce (NYSE:KFRC) is a professional staffing company that specializes in placing technology and finance experts with businesses on both temporary and permanent bases. Kforce reported revenues of $349.3 million, up 4.5% year on year. This print met analysts’ expectations. Overall, it was a very strong quarter as it also logged an impressive beat of analysts’ EPS guidance for next quarter estimates and revenue guidance for next quarter beating analysts’ expectations. Kforce pulled off the highest guidance raise in the group. The stock is flat since reporting and currently trades at $57.71. Read our full, actionable report on Kforce here, it’s free. With roots dating back to 1948 as the first specialized recruiting firm for accounting and finance professionals, Robert Half (NYSE:RHI) provides specialized talent solutions and business consulting services, connecting skilled professionals with companies across various fields. Robert Half reported revenues of $1.34 billion, down 2.4% year on year. This result topped analysts’ expectations by 1%. It was a satisfactory quarter as it also recorded EPS in line with analysts’ estimates. The stock is up 9.9% since reporting and currently trades at $41.61. Read our full, actionable report on Robert Half here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Barrett Business Services (BBSI) saw the market react sharply to its second quarter results, as profitability fell short of Wall Street expectations despite modest revenue growth. Management attributed the weaker results to ongoing headwinds in client workforce trends and a challenging California workers’ compensation environment. CEO Gary Kramer described the quarter as a “transition year,” highlighting how macroeconomic uncertainty led many clients to reduce headcount, which offset gains from new client additions. He acknowledged, “That trend persisted in Q4 and then moderated in Q1. Unfortunately, that trend resumed in Q2.” Is now the time to buy BBSI? Find out in our full research report (it’s free). Revenue: $319.3 million vs analyst estimates of $319.3 million (3.8% year-on-year growth, in line) Adjusted EPS: $0.52 vs analyst expectations of $0.56 (6.3% miss) Operating Margin: 4.8%, down from 7.5% in the same quarter last year Market Capitalization: $760.7 million While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Christopher Moore (CJS Securities) sought clarity on the impact of California workers’ compensation rate hikes. CEO Gary Kramer emphasized the positive sign of ongoing rate increases and said, “We are seeing this rate environment lift up.” Moore also asked about other key margin drivers beyond workers’ comp. Kramer pointed to client volume, noting strong new business but ongoing client workforce reductions, especially in blue-collar sectors. Jeff Martin (ROTH Capital Partners) inquired about renewal rates and administrative cost changes in workers’ comp. Kramer explained the structure remained unchanged, with the focus on passing higher costs to clients, and noted that favorable prior-year claim adjustments are “slowing down.” Marc Riddick (Sidoti) asked about new business wins and renewal rates. Kramer highlighted record client additions in June and growing traction in white-collar verticals, attributing success to expanded technology and local service teams. Vincent Colicchio (Barrington Research) questioned the outlook for controllable growth and performance in new markets like Dallas and Chicago. Kramer said the company expects better growth in the back half due to softer comps and expressed confidence in continued investment for successful new markets. In coming quarters, the StockStory team will be closely watching (1) the pace at which BBSI’s pricing actions for workers’ compensation coverage flow through to improved margins, (2) trends in client hiring and workforce reductions, particularly in blue-collar segments, and (3) the ramp-up of new markets and expanded product offerings such as BBSI Benefits. Execution against these milestones will provide clearer signals on the company’s ability to regain profitability momentum. Barrett currently trades at $31.39, down from $40.11 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Barrett Business Services (BBSI) came out with quarterly earnings of $0.52 per share, missing the Zacks Consensus Estimate of $0.56 per share. This compares to earnings of $0.7 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -7.14%. A quarter ago, it was expected that this human resources management company would post a loss of $0.15 per share when it actually produced a loss of $0.13, delivering a surprise of +13.33%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Barrett, which belongs to the Zacks Outsourcing industry, posted revenues of $2.29 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.08%. This compares to year-ago revenues of $2.23 billion. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Barrett shares have added about 10.7% since the beginning of the year versus the S&P 500's gain of 13%. While Barrett has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Barrett was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.76 on $2.41 billion in revenues for the coming quarter and $1.88 on $9.36 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Outsourcing is currently in the bottom 14% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Conduent (CNDT), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This company is expected to post quarterly loss of $0.14 per share in its upcoming report, which represents a year-over-year change of -7.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Conduent's revenues are expected to be $702 million, down 6.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Barrett Business Services, Inc. (BBSI) : Free Stock Analysis Report Conduent Inc. (CNDT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved 1% total worksite employee (WSE) growth as record new client additions and strong retention were largely offset by existing clients reducing headcounts due to macro uncertainty. Identified a definitive turning point in the California workers' compensation market, with insurers pushing rate increases for the first time in over a decade to combat rising litigation and cumulative trauma claims. Characterized 2026 as a transition year for margins, where the lag in monthly client renewals prevents immediate realization of pricing actions intended to offset cost inflation. Expanded the addressable market by successfully penetrating white-collar verticals, such as medical and accounting practices, through a modernized tech stack and comprehensive health insurance offerings. Leveraged recruiting expertise to pivot staffing resources toward PEO client placements, resulting in a 35% increase in applicant placements despite an 18% decline in traditional staffing revenue. Maintained 'controllable growth' momentum, adding approximately 4,500 WSEs from net new business, which helped mitigate the impact of broader client workforce reductions. Observed that while workforce reductions resumed in Q2 after moderating in Q1, the impact was most pronounced in the construction sector and began spreading beyond California to other geographies. Expects 2026 to represent the low watermark for gross margins, with anticipated improvement in 2027 as compounding 'rate on rate' pricing actions fully cycle through the portfolio. Anticipates the rate of client workforce decline to moderate in the second half of 2026 due to easier year-over-year comparisons against the headcount reductions that began in Q3 2025. Plans to convert three additional asset-light market locations into traditional full-service branches by late 2026 or early 2027 based on proven local traction. Revised full-year guidance to a narrower range for gross billings (3% to 4%) and WSE growth (2% to 3%) to reflect current macroeconomic headwinds and year-to-date performance. Continues to invest in the 'employee life cycle' tech stack, including performance management and applicant tracking, to drive long-term sales differentiation and client stickiness. Recognized $2 million in favorable prior-year workers' comp adjustments, a significant decrease from $8.8 million in the prior year, reflecting industry-wide increases in claim cost expectations. Noted a rise in 'post-termination cumulative trauma' claims in California, which are litigated at higher costs and occur at 2.5x the frequency seen three years ago. Executed $15 million in share repurchases during Q2 at an average price of $30.92, leaving $40 million remaining in the current authorization. Reported a 2% decrease in SG&A expenses through disciplined cost control, primarily driven by lower employee-related expenses. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management views the regulatory increase as a positive signal of market direction, though they emphasize that individual carrier pricing flexibility is the primary driver of their 8-month trend of rate increases. Confirmed that the market has reached a bottom, allowing BBSI to align insurance pricing more closely with rising costs. Maintained a 97% net PEO retention rate during the 1/1 renewal cycle, with the benefits book currently performing in line with expectations. Anticipates another year of double-digit industry-wide medical trend increases, which BBSI is monitoring for future pricing adjustments. Management expressed high confidence in maintaining new business momentum, noting that June was the best month for new client additions in company history. Confirmed that new metros like Dallas and Chicago are performing well, justifying the transition from asset-light models to full-resource branches.

- Revenues up 4% to $319.3 Million and Gross Billings up 3% to $2.29 Billion - VANCOUVER, Wash., Aug. 05, 2026 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the second quarter ended June 30, 2026. Second Quarter 2026 Financial Summary vs. Year-Ago Quarter Revenues up 4% to $319.3 million. Gross billings up 3% to $2.29 billion. Average worksite employees (“WSEs”) up 0.5%. Net income of $12.9 million, or $0.52 per diluted share, compared to net income of $18.5 million, or $0.70 per diluted share. “BBSI delivered second quarter results in line with the trends we've been communicating, with strong new client additions once again exceeding our expectations," said Gary Kramer, President and CEO of BBSI. "Continued softness in client hiring remains our primary growth headwind and has not yet shown the recovery we had anticipated. We saw positive client pricing trends improve throughout Q2 as the workers' compensation market continues to firm up. This has been offset by a slowing of favorable prior-year claims adjustments — a trend we're seeing across the industry. We continue to view 2026 as the low point for margin as our cumulative pricing actions continue to build in the periods ahead.” Second Quarter 2026 Financial Results Revenues in the second quarter of 2026 increased 4% to $319.3 million compared to $307.7 million in the second quarter of 2025. Total gross billings in the second quarter of 2026 increased 3% to $2.29 billion compared to $2.23 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 2.5% in the second quarter of 2026, which included favorable prior year liability and premium adjustments of $2.0 million. This compares to 2.1% in the second quarter of 2025, which included favorable prior year liability and premium adjustments of $8.8 million. Net income for the second quarter of 2026 was $12.9 million, or $0.52 per diluted share, compared to net income of $18.5 million, or $0.70 per diluted share, in the year-ago quarter. Liquidity As of June 30, 2026, unrestricted cash and investments were $67.9 million compared to $91.9 million as of March 31, 2026. BBSI remained debt free at quarter end. Capital Allocation Continuing under the Company’s stock repurchase program established in August 2025, BBSI repurchased $15.0 million of common stock in the second quarter, comprising 486,811 shares at an average price of $30.92. At June 30, 2026, approximately $40.3 million remained available under the $100 million repurchase program. The Company paid $1.9 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 September 4, 2026, to all stockholders of record as of August 21, 2026. Through a combination of stock repurchases and dividends, year-to-date capital returned to shareholders totaled more than $39 million. Outlook BBSI is updating its outlook for 2026 as follows: Gross billings growth of 3% to 4%. Growth in the average number of WSEs of 2% to 3%. Gross margin as a percent of gross billings of 2.70% to 2.75%. Effective annual tax rate to remain at 26% to 27%, excluding the one-time charge related to prior-year tax credits. Conference Call BBSI will conduct a conference call on Wednesday, August 5, 2026, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the second quarter ended June 30, 2026. BBSI’s CEO Gary Kramer and CFO Anthony Harris will host the conference call, followed by a question and answer period. Date: Wednesday, August 5, 2026Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)Toll-free dial-in number: 1-800-717-1738International dial-in number: 1-646-307-1865Conference ID: 1103264 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 September 5, 2026. Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671Replay ID: 1103264 Key Performance Metrics and Non-GAAP Financial Measures During the first quarter of 2026, the Company recorded tax-effected charges of $11.6 million related to the disallowance of certain wage-based tax credits claimed in prior years. This charge was recorded within provision for income taxes on our condensed consolidated statements of operations. We have excluded this charge from our non-GAAP measures as it relates to prior periods and is not indicative of our current or future operational performance. The reconciliation of net loss and diluted loss per share to non-GAAP net income and non-GAAP diluted income per share for the six months ended June 30, 2026 is shown in the table below (in thousands, except per share amounts): 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 six months ended June 30, 2026 and 2025. 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. 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. 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 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; the outcome of audits and other determinations by the IRS; 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 wars in Ukraine and Iran, other 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 impact of the One Big Beautiful Bill Act and other recently enacted legislation 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 2025 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. Investor Relations: Gateway Group, Inc.Cody Slach Tel 1-949-574-3860 [email protected]

Interested in Barrett Business Services, Inc.? Here are five stocks we like better. Q2 growth was modest: Gross billings rose 2.6% year over year to $2.29 billion, while diluted EPS fell to $0.52 from $0.70. New client acquisitions increased 17%, but workforce reductions and cautious hiring among existing clients limited worksite-employee growth to 1%. Workers’ compensation pricing is improving, but margins remain pressured: BBSI renewed California policies on favorable terms and has raised pricing for eight consecutive months. Management expects 2026 to be a gross-margin low point, with improvement anticipated in 2027 as higher pricing flows through monthly client renewals. The company lowered its 2026 outlook to 3%–4% gross-billings growth, 2%–3% worksite-employee growth and 2.7%–2.75% gross margin, citing continued economic uncertainty. BBSI remains debt-free, held $68 million in cash and investments, repurchased $15 million of stock and reaffirmed its dividend. Barrett Business Services (NASDAQ:BBSI) reported second-quarter growth in gross billings and worksite employees, though management said persistent economic uncertainty continued to weigh on hiring among existing clients. Gross billings increased 2.6% year over year to $2.29 billion for the quarter ended June 30, 2026. PEO gross billings rose 2.8% to $2.28 billion, while staffing revenue declined 18% to $14 million. Diluted earnings per share were $0.52, compared with $0.70 in the prior-year quarter. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control President and CEO Gary Kramer said revenue was “slightly below” the company’s expectations, but client acquisition trends exceeded internal expectations. New client acquisitions rose 17% from a year earlier, and the company added approximately 4,500 worksite employees from net new clients year over year. Those gains were partly offset by workforce reductions at existing clients. Total worksite employees increased 1% during the quarter as client hiring remained below historical levels and some customers reduced headcount. → 3 Drone Stocks That Should Soar After the Summer Slump Kramer said the company’s sales and retention efforts produced “strong controllable growth,” even as macroeconomic and geopolitical conditions constrained client hiring. BBSI expects the impact from lower client hiring to moderate during the second half as comparisons become easier. Chief Financial Officer Anthony Harris said average billing per worksite employee per day rose 2.2%, reflecting continued wage growth, partly offset by lower overtime and fewer hours worked per employee. Southern and Northern California PEO gross billings were flat year over year, as stronger new-client additions were offset by workforce reductions among existing clients. The Mountain region grew 2%, while the Pacific Northwest grew 3%. East Coast gross billings increased 16%, marking the company’s 21st consecutive quarter of double-digit growth, according to Harris. Asset-light markets grew 73% and added roughly 400 worksite employees during the quarter. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure The company expects to convert three additional asset-light locations into traditional branches later in the year, although Kramer said the timing could extend into the first quarter depending partly on real estate availability. He added that newer markets including Dallas and Chicago were performing well. Management continued to characterize 2026 as a transition year for California workers’ compensation pricing. Harris said the company renewed its fully insured workers’ compensation policies effective July 1 on favorable terms, including a modest rate increase, no downside exposure for future adverse claim development, and continued participation in favorable claim development through return premiums. The California Insurance Commissioner approved an average 8.7% premium rate increase in 2025 and announced an additional 6.6% increase effective in September 2026. Kramer said the regulatory guidance is a positive sign, though individual insurance carriers ultimately determine the rates they charge. BBSI has raised workers’ compensation pricing for eight consecutive months, its first sustained period of price increases in a decade. Management said the increases are expected to more than offset higher claims costs, but their effect will be gradual because clients renew monthly. Harris said favorable prior-year workers’ compensation liability and premium adjustments totaled $2 million in the second quarter, down from $8.8 million a year earlier. The smaller adjustment reflected industrywide increases in claim-cost expectations that are now being incorporated into actuarial estimates. Kramer said higher litigation and cumulative trauma claims have contributed to the market shift, including post-termination cumulative trauma claims. He said the company expects 2026 to represent a low point for gross margins before improvement in 2027 as higher client pricing compounds through additional renewals. BBSI added about 70 clients and more than 2,000 participants to its BBSI Benefits plans during the quarter. Kramer said the company retained 93% of benefits clients at Jan. 1 renewals, while another 4% remained PEO clients but had their benefits business placed elsewhere through BBSI’s agency capabilities. The company has expanded its technology offerings across the employee lifecycle, including an applicant tracking system, benefits offering, employee file cabinet, learning management system and performance management module. Kramer said the added products have helped BBSI compete for more white-collar accounts, including doctors, insurance brokers, dentists and certified public accountants, alongside its traditional blue-collar focus. Staffing revenue declined as existing customers reduced orders, though the company’s new staffing business exceeded runoff business. BBSI also placed 157 applicants for PEO clients during the quarter, a 35% increase from the prior-year period. Harris said staffing should grow sequentially in the third quarter due to seasonality, but is still expected to show a double-digit year-over-year decline for the full year. BBSI narrowed its 2026 outlook, citing year-to-date results and continued uncertainty affecting client workforces. The company now expects: Gross billings growth of 3% to 4%, compared with its prior outlook of 3% to 5%. Average worksite employee growth of 2% to 3%, compared with the previous 2% to 4% range. Gross margin of 2.7% to 2.75% of gross billings, versus prior guidance of 2.7% to 2.85%. A normalized effective annual tax rate of 26% to 27%, excluding a one-time first-quarter tax charge. SG&A expenses declined about 2% in the second quarter, primarily due to employee-related expenses. BBSI expects full-year SG&A growth to remain below gross billings growth. At June 30, the company had $68 million in unrestricted cash and investments and no debt. During the quarter, BBSI repurchased $15 million of stock at an average price of $30.92 per share under its August 2025 authorization, leaving $40 million available. It also paid $1.9 million in dividends and reaffirmed its dividend for the following quarter. Barrett Business Services, Inc (NASDAQ: BBSI) is a professional employer organization (PEO) headquartered in Northridge, California. Founded in 1971 by Barrett K. Levesque, the company provides comprehensive human resources outsourcing solutions to small and mid-sized businesses. Through its consultative model, Barrett Business Services helps clients streamline administrative processes, mitigate regulatory risk and focus on core operations. The company's core offerings include payroll administration, employee benefits management, workers' compensation and risk management services. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Barrett Business Services Q2 Earnings Call Highlights" was originally published by MarketBeat. 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Business management solutions provider Barrett Business Services (NASDAQ:BBSI) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 3.8% year on year to $319.3 million. Its GAAP profit of $0.52 per share was 6.3% below analysts’ consensus estimates. Is now the time to buy Barrett? Find out in our full research report. Revenue: $319.3 million vs analyst estimates of $319.3 million (3.8% year-on-year growth, in line) EPS (GAAP): $0.52 vs analyst expectations of $0.56 (6.3% miss) Operating Margin: 4.8%, down from 7.5% in the same quarter last year Market Capitalization: $984.4 million “BBSI delivered second quarter results in line with the trends we've been communicating, with strong new client additions once again exceeding our expectations," said Gary Kramer, President and CEO of BBSI. Operating as a professional employer organization (PEO) that serves over 8,000 companies with more than 120,000 worksite employees, Barrett Business Services (NASDAQ:BBSI) provides management solutions that help small and mid-sized businesses handle human resources, payroll, workers' compensation, and other administrative functions. A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. With $1.27 billion in revenue over the past 12 months, Barrett is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base. As you can see below, Barrett’s sales grew at a decent 6.8% compounded annual growth rate over the last five years. This shows its offerings generated slightly more demand than the average business services company, a helpful starting point for our analysis. We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Barrett’s annualized revenue growth of 7.5% over the last two years aligns with its five-year trend, suggesting its demand was stable. This quarter, Barrett grew its revenue by 3.8% year on year, and its $319.3 million of revenue was in line with Wall Street’s estimates. Looking ahead, sell-side analysts expect revenue to grow 6% over the next 12 months, a slight deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and implies the market is forecasting some success for its newer products and services. ONE MORE THING: 3 Hidden Platforms Growing 3X Faster than Amazon, Google, and PayPal. Amazon, Google, and Meta all followed the same playbook: Dominate an ignored market. Build an unbeatable moat. Scale until you’re unstoppable. These three platforms are running that exact playbook right now. The early investors in Amazon made fortunes. The early investors in these could do the same. Get All 3 Stocks Here for FREE. Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes, and interest on debt - metrics less connected to business fundamentals. Barrett’s adjusted operating margin has more or less stayed the same over the last 12 months , averaging 5.4% over the last five years. This profitability was lousy for a business services business and caused by its suboptimal cost structure. Analyzing the trend in its profitability, Barrett’s adjusted operating margin might have fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. This quarter, Barrett generated an adjusted operating margin profit margin of 4.8%, down 2.7 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue. Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions. Barrett’s EPS grew at a weak 1.8% compounded annual growth rate over the last five years, lower than its 6.8% annualized revenue growth. However, its adjusted operating margin didn’t change during this time, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings. Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business. For Barrett, its two-year annual EPS declines of 13.7% show it’s continued to underperform. These results were bad no matter how you slice the data. In Q2, Barrett reported EPS of $0.52, down from $0.70 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Barrett’s full-year EPS to grow 60.3% from $1.36 to $2.18. We struggled to find many positives in these results. Overall, this was a mixed quarter. The stock remained flat at $40.08 immediately after reporting. Is Barrett an attractive investment opportunity right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.