Barrett Business Services Reports 10.1% Revenue Growth in Q1 2025

Barrett Business Services, Inc. (BBSI) reported its financial results for the first quarter of 2025, revealing total revenues of $292.6 million, a 10.1% increase from $265.8 million in the same period of 2024. The growth was primarily driven by a $28.7 million increase in Professional Employer Organization (PEO) services revenue, which rose to $274.9 million, while staffing services revenue decreased by $2.0 million to $17.6 million. The company's net loss for the quarter was $1.0 million, compared to a loss of $0.1 million in the prior year, resulting in a diluted loss per share of $0.04, up from $0.01.

BBSI's gross margin for the first quarter was $42.6 million, representing 14.6% of total revenue, slightly down from 14.9% in the previous year. The decrease in gross margin percentage was attributed to higher payroll taxes and benefits, which accounted for 63.9% of revenue, compared to 60.9% in the prior year. Direct payroll costs also decreased as a percentage of revenue, reflecting a shift in the customer base away from staffing services. Selling, general, and administrative expenses increased to $44.8 million, or 15.3% of revenue, up from 16.0% in the previous year.

Operationally, BBSI reported an average of 132,459 worksite employees (WSEs) during the quarter, a 7.6% increase from 123,050 in the first quarter of 2024. The ending WSE count was 133,699, up 7.1% year-over-year. The company continues to expand its service offerings, including additional employee benefit programs, which contributed to the increase in payroll taxes and benefits expenses. BBSI's cash and cash equivalents, along with restricted cash, totaled $43.0 million at the end of the quarter, a decrease of $39.6 million from the previous quarter, primarily due to increased investments and stock repurchases.

Looking ahead, BBSI anticipates continued fluctuations in its quarterly operating results, influenced by seasonal demand, wage limits on payroll taxes, and claims experience for workers' compensation. The company remains focused on leveraging its decentralized operational model to enhance service delivery and client satisfaction. BBSI's management is optimistic about future growth opportunities, particularly in expanding its PEO services and enhancing its employee benefit offerings, while maintaining compliance with financial covenants associated with its revolving credit facility.