Barrett (BBSI) Q2 Revenue Jumps 10%
Revenue (GAAP) of $307.7 million exceeded expectations in Q2 2025 and rose 10.0% year over year.
Earnings per share (GAAP) were $0.70, beating consensus and up 12.9% year-over-year.
Management raised its outlook for gross billings growth to 9% to 10% (from 7% to 9%) and for worksite employee growth to 6% to 8% (from 4% to 6%) for fiscal 2025.
These 10 stocks could mint the next wave of millionaires ›
Barrett Business Services (NASDAQ:BBSI), a provider of business management solutions and professional employer organization (PEO) services for small and mid-sized businesses, reported financial results for the second quarter of fiscal 2025 on August 6, 2025. The company posted GAAP revenue and earnings above analyst expectations in Q2 2025, with reported GAAP revenue of $307.7 million versus the $299.8 million estimate, and GAAP earnings per share of $0.70, outpacing the $0.6875 consensus. The period saw strong net new client additions and improved workers' compensation costs, though existing client hiring remained muted. Management increased full-year 2025 guidance for gross billings (to 9%–10%) and average worksite employee growth (to 6%–8%), reflecting continued business momentum.
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding Barrett Business Services' Business Model and Strategic Focus
Barrett Business Services operates as a business management solutions provider, specializing in professional employer organization (PEO) services for smaller companies. Through its services, it handles human resource administration, payroll processing, and workers' compensation, freeing up clients to focus on their core operations.
The company differentiates itself by offering an integrated management platform. This approach combines HR outsourcing with consulting support, helping clients manage personnel needs and meet regulatory requirements. The firm emphasizes localized, decentralized service teams that work closely with client companies to tailor offerings, nurture relationships, and deliver responsive support. Its success depends on adding new clients, expanding its product suite (like healthcare benefits and HR technology), managing insurance cost risks, and maintaining compliance across regulatory environments.
Quarter in Review: Growth Drivers and Operational Developments
During the quarter, Revenue increased 10% and net income rose 10.8% compared to Q2 2024. Revenue (GAAP) reached $307.7 million, and Earnings per share (GAAP) grew to $0.70. The company's gross billings—a non-GAAP measure of all client billings before deduction of direct staffing costs—rose 10% year-over-year, highlighting continued expansion in its core PEO offering.
Net new client additions were a critical factor, driving a year-over-year increase of 8.0% in average worksite employees, from 128,734 to 138,969. Management noted that 'sustained momentum in BBSI Benefits'—the firm's healthcare product suite—was a key factor in landing new customers. The BBSI Benefits platform, which as of April 2025 covers more than 17,500 participants, exceeded expectations for participant growth, especially in California where real uptake outpaced estimates by 2.5 times in just seven months.
The company also rolled out an applicant tracking system in March 2025, a software product that allows clients to manage job postings and integrate those seamlessly into payroll and timekeeping. While still early, initial client feedback was positive.
Risk management, particularly around workers' compensation expenses, remained strong. Workers' compensation expense as a percent of gross billings fell to 2.1%, down from 2.5% in Q2 2024, partly due to favorable prior-year liability and premium adjustments totaling $8.8 million. These adjustments lower the company's current-year expense but may not recur at the same level in future quarters. The company's staffing services, which comprise a smaller share of total revenue, experienced a decline earlier in 2025.—Staffing revenue fell 11.5% to $17.5 million compared to Q2 2024.—continuing a recent trend of softer demand in that area.
Capital returned to shareholders included $8.0 million in share repurchases and a dividend payout of $2.0 million. The company also authorized a new $100 million stock repurchase program, set to run for two years beginning August 4, 2025. For Q3, a dividend of $0.08 per share was declared.
Looking Forward: Guidance and Monitor Points for Investors
Management raised guidance for the remainder of fiscal 2025. Expected gross billings growth rose to a range of 9% to 10%, up from a previous range of 7% to 9% for 2025. Average worksite employee growth is now anticipated in the 6% to 8% band, compared to the earlier 4% to 6% for 2025. Gross margin guidance was also narrowed and nudged upward at the low end, with a projected range of 2.9% to 3.05% of gross billings. The company expects an effective annual tax rate between 26% and 27%.
Looking ahead, investors should watch for continued traction in client additions and adoption of value-added services such as BBSI Benefits and new HR technology. While net new clients remain a central driver, management cautions that existing client hiring is sluggish, reflecting broader macroeconomic caution. Ongoing weakness in the staffing segment and one-time insurance adjustments are other factors to monitor for potential volatility in results. The quarterly dividend was maintained at $0.08 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor's total average return is 1,026%* — a market-crushing outperformance compared to 180% for the S&P 500.
They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.
*Stock Advisor returns as of August 4, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CBC
2 hours ago
- CBC
Military pay raise a big boost for lower ranks, officials say
Social Sharing The federal government's pay increase for members of the Canadian military will provide some much-needed support for the lowest-ranking positions who are struggling in the face of rising costs of living, according to senior military officials. Prime Minister Mark Carney announced a $2 billion-per-year graduated series of salary top-ups and incentives on Friday. "The biggest increases should make a difference for our lower-ranked members and those are the ones that, at this time, seem to be hardest hit by the economy," Royal Canadian Air Force Lt.-Gen. Jamie Speiser-Blanchet told reporters at an event in Halifax on Saturday. The changes will see the lowest ranks of the regular force, like privates, ordinary sailors and aviators, receive a 20 per cent pay increase. Speiser-Blanchet said some members of the military are struggling to make ends meet, just like many Canadians, and this investment will make their lives a lot easier. The increases in pay and benefits will also help with recruitment and retention, said Canadian Royal Navy Vice-Admiral Angus Topshee. A $10,000 bonus is available for recruits in high-demand trades to complete basic training, an additional $20,000 when their training is completed and another $20,000 once they have completed their first term of service. Members and their families sacrifice a lot while serving their country so added incentives to sign up are welcome news, Topshee said. "We ask people to move their families across the country, often multiple times." he said. "There is no overtime in the military. There is no weekend. If we need you to work, you work." Pay raise 'long overdue': Defence minister The last comprehensive overhaul of the military's pay and benefits system happened in 1998, according to senior defence officials. "We're very proud to be able to provide the kind of pay package that our armed forces members deserve," David McGuinty, minister of national defence, said in Halifax on Saturday. "It's long overdue." Many low-ranking military members have struggled due to the cost of living since the pandemic, according to VETS Canada, a Halifax-based charity that supports members. Deb Lowther, the organization's CEO, said she was pleased with Friday's announcement as the organization sees more and more serving members "coming to us in crisis." She said she would like Ottawa to turn its focus to providing more help for members leaving the military and trying to transition back into civilian life. McGuinty told reporters on Saturday that the federal government has heard those concerns and will continue to look at ways to improve support for current and former members. "I think we'll have more to say about this in due course," he said.
Globe and Mail
2 hours ago
- Globe and Mail
3 Reasons to Buy Carnival Stock Like There's No Tomorrow
Key Points Carnival's revenue continues to reach record levels, with the business benefiting from strong demand for cruise travel. Rising profits have helped the management team reduce the company's debt burden. Even though the stock has rocketed higher, investors will be drawn to the current valuation. 10 stocks we like better than Carnival Corp. › Carnival (NYSE: CCL) continues sailing in the right direction, something its shareholders have become extremely optimistic about. That's not a surprise, given that the cruise line business was decimated by the COVID-19 pandemic. However, the company is on much better footing these days as it serves robust demand from consumers. In the past 12 months, shares have soared 104% (as of Aug. 6), showcasing heightened bullishness. Despite this monster performance, here are three reasons why investors should still consider buying this travel stock like there's no tomorrow. Durable demand Carnival's business has benefited from tremendous momentum. During the fiscal 2025 second quarter (ended May 31), the company reported record revenue of $6.3 billion. This figure was up 9.5% year over year and 164% higher than the same period of fiscal 2022. There's clearly strong demand from travelers. Carnival had a whopping $8.5 billion in customer deposits in Q2, a record. Net yields, a measure of a cruise line's pricing power, came in at a record $200.07, after increasing by 7.2% during the second quarter. This was "driven by close-in strength in ticket prices and continued strong onboard spending," CFO David Bernstein said on the Q2 2025 earnings call. The demand for Carnival has been impressive in the years following the pandemic's disruption. Investors might think that the good times will come to an end soon. While the rapid growth the business has registered won't continue indefinitely, there's still reason to remain optimistic over the long term. The cruise industry faces some favorable tailwinds. For instance, younger travelers are more interested in these vacations. There are also more first-time passengers coming aboard. As it pushes to capture the opportunity ahead, Carnival is investing in building new cruise ships. It just opened a new private destination, called the Celebration Key, in July. What's more, Carnival is upgrading its rewards program, which will launch in 2026. This can boost customer loyalty and drive repeat cruise trips. Financial improvements During the pandemic, Carnival was forced to pause its operations. To survive the revenue hit, management had to take on more debt to fund the business. It's understandable if, at the time, investors were worried that Carnival would never get out of its predicament. With each passing quarter these days, the company is making substantial progress when it comes to its financial situation. During Q2, Carnival's operating income increased 66.8% year over year to $934 million. This was another record. To its credit, the business is starting to benefit from being able to better leverage its costs as revenue rises. Cruise and tour operating expenses were up just 2.3% year over year during the second quarter. With profitability showing major improvements, Carnival has been able to clean up its balance sheet as well. It ended Q2 with $27.3 billion of long-term debt, a balance that has been reduced by 20% in the past three years. The company's credit rating was also upgraded by two major agencies, which is a vote of confidence. Carnival's upside Carnival's stock has been a huge winner. However, the valuation is still compelling for new investors, even though the company is operating at a very high level these days. The price-to-earnings (P/E) ratio of 15.8 is no doubt cheap, representing a 36% discount to the overall S&P 500 index. Should the P/E multiple get closer to the benchmark's level, there is sizable upside for patient investors. Carnival's strong demand, improving financials, and attractive valuation are three reasons to buy the stock like there's no tomorrow. Should you invest $1,000 in Carnival Corp. right now? Before you buy stock in Carnival Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Carnival Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025
National Post
2 hours ago
- National Post
A skeptic's take on the housing crisis: 'The developer is the good guy'
Article content 'If you're saying that the problem is, we're not adding enough housing to existing neighbourhoods, and if we would only get rid of zoning regulations, everything would be fine, you need to have proof of that,' Patrick asserts. 'And when you look around for proof,' he says, 'you find that there really isn't any.' Article content The most obvious example, he suggests, is the city of Vancouver, where urban boundaries have not expanded in generations. 'So all the housing that has gone into Vancouver,' he explains, 'has been essentially infill housing that has been accepted through changes and zoning ordinances.' Article content Vancouver has tripled the number of housing units since the 1960s, Patrick reports. What's less well known, he says, this densification hasn't just been achieved by building high-rises in the city's downtown; the rest of the city has accepted over 50 percent of the housing units in lower density formats (basement suites, duplexes, triplexes, four-storey buildings along corridors). Article content Article content 'That housing, advanced by me and others, was based on partly the premise that this would lead to affordable housing,' he says. 'We tried really hard. We tripled the density. We tripled the number of housing units within the same footprint,' he reports, 'and as a reward for our heroic efforts, we have the highest home prices, when measured against average regional incomes of any place in North America, and the third highest home prices in the world.' Article content So he's warning the feds, and anyone else who will listen: 'If you think the solution is just to get rid of the restrictions on zoning and let towers be built basically everywhere, which is what the Vancouver strategy is now, you're gonna be disappointed.' Article content In his 2024 book, 'Broken City,' Patrick explains what's happening. 'It turns out that the issue here is not the building, it's the land under the building,' he argues. When a city allows for additional density, that changes the financial value of the dirt on the proposed building site. Thus, he reports, 'If you go from allowing a one-storey building to allowing a 10-storey building, you get a 1,000-percent increase in the price of the land.' Article content Article content 'So the market is really a market-per-square-foot of the building,' he explains, 'and by adding density, it doesn't change the value of that square foot. What it does change is the value of the land underneath that building.' Article content 'As the authorized use of land is increased,' Patrick elaborates, 'the value of the land is going up and up and up, and it, unfortunately, goes up more or less in measure to what the market is allowing for that built price.' Article content The increase in land values created by up-zoning and densification are not going to the municipality, Patrick suggests. 'That's what's so tragic about it, about the whole thing,' he contends, 'the policy makers are saying (and I think many of them actually believe it), that this will help the community and it's actually harming the community. It's really helping the land speculators.' Article content And Patrick makes clear: The land speculator is different than the developer. 'The developer is the good guy,' he says, chuckling. 'They build a building. The building has social value. What doesn't appear to have social value is the land, and the speculation part of it, which is preventing us from adjudicating land rights to the benefit of the community.' Article content 'The way things are unfolding now,' he continues, 'is that real estate nationally constitutes about 25 per cent of the gross domestic product in Canada, and that's way too high a level. And it's all structured on the idea that real estate values cannot go down … We're seeing it here in Vancouver, where the real estate industry is begging for additional federal local and provincial assistance because of the downturn.' Article content The current collapse of the market for small condo units makes it obvious that the investor community has soured on the profit potential of this product, Patrick explains, stranding these assets in a financial limbo. 'It is very strong proof that the driver for real estate in Canada has for many years been 'housing as investment' vs. 'housing as homes,'' he says. 'This distortion elevated the price of urban land making it impossible for developers to build housing for families at a price they can afford.' Article content Basically, we're doing the wrong thing, Patrick concludes: 'We're going in and giving away land rights, hoping that that will lead to affordability. We shouldn't do that, because it doesn't work. But what we can do is give away land rights, insisting on affordability.' Article content
