Barrett's third quarter results came in largely as Wall Street anticipated, with revenue growth driven by new client additions and continued expansion of its benefits offerings. Management credited the company’s record number of worksite employees to both strong sales execution and high client retention, although this was partially offset by weaker hiring from existing clients, especially in California. CEO Gary Kramer noted that macroeconomic uncertainty, including interest rates and tariff policy, contributed to softer client hiring in certain industries. Kramer explained, “Our record controllable growth was slightly offset by a decline in our clients' workforce and resulted in a total growth of worksite employees by 6.1%.”
Is now the time to buy BBSI? Find out in our full research report (it’s free for active Edge members).
Barrett (BBSI) Q3 CY2025 Highlights:
- Revenue: $318.9 million vs analyst estimates of $319.3 million (8.4% year-on-year growth, in line)
- Adjusted EPS: $0.79 vs analyst expectations of $0.80 (1.3% miss)
- Adjusted EBITDA: $26.88 million vs analyst estimates of $29.13 million (8.4% margin, 7.7% miss)
- Operating Margin: 7.8%, in line with the same quarter last year
- Market Capitalization: $888.9 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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.
Our Top 5 Analyst Questions From Barrett’s Q3 Earnings Call
- Jeff Martin (ROTH Capital Partners) asked about the impact of rising health insurance claims costs on BBSI Benefits policies. CEO Gary Kramer explained that while Barrett does not take direct insurance risk, higher market rates are driving more businesses to seek quotes, with volume for new business up 60% year over year.
- Jeff Martin (ROTH Capital Partners) followed up on the drivers behind record worksite employee additions, questioning if BBSI Benefits was the main catalyst. Kramer said growth was due to “many things,” including improvements in sales, technology, and people, not a single product.
- Jeff Martin (ROTH Capital Partners) inquired about expected acceleration in worksite employee growth from higher workers’ compensation rates in 2026. Kramer said the full impact will become clearer after the upcoming renewal cycle, with pricing discipline expected to support growth.
- Christopher Moore (CJS Securities) questioned variables that could materially affect gross billings growth for next year. Kramer highlighted controllable growth, wage inflation, and client workforce trends as key factors, noting the outlook remains conservative given macro uncertainties.
- Marc Riddick (Sidoti) asked about the performance of new Chicago and Dallas branches and the upcoming Nashville launch. Kramer described successful grand openings and strong local team engagement, seeing these expansions as important contributors to growth.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the effectiveness of new product launches and technology enhancements, particularly AI-enabled HR features; (2) the pace of client additions and retention in newly opened and developing markets; and (3) how macroeconomic trends, such as insurance rate changes and regional employment shifts, affect both new and existing client hiring. Execution on these initiatives will be critical for sustaining growth and margin stability.
Barrett currently trades at $34.85, down from $40.76 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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