Barrett Business Services Reports 3.8% Revenue Growth in Q2 2026, Net Income Declines

Barrett Business Services, Inc. (BBSI) reported its financial results for the second quarter and first half of 2026, revealing a total revenue of $319.3 million for the quarter, a 3.8% increase from $307.7 million in the same period last year. For the first six months, revenue reached $626.3 million, up 4.3% from $600.2 million in 2025. The growth was primarily driven by a 5.1% increase in Professional Employer Organization (PEO) services revenue, which amounted to $305.0 million, while staffing services revenue decreased by 18.2% to $14.3 million.

Despite the revenue growth, BBSI reported a net income of $12.9 million for the second quarter, down from $18.5 million in the prior year, resulting in diluted earnings per share of $0.52 compared to $0.70. The first half of 2026 saw a net loss of $1.9 million, contrasting with a net income of $17.4 million in the same period of 2025. The decline in profitability was attributed to increased costs, particularly in benefit costs and workers' compensation expenses, which rose significantly due to expanded adoption of PEO client benefit programs and higher health insurance premiums.

Operationally, BBSI's average worksite employees (WSEs) grew by 0.5% year-over-year to 139,712 in the second quarter, while ending WSEs increased by 0.6% to 141,561. The company also reported a gross margin of $64.9 million for the second quarter, representing 20.3% of revenue, down from 23.8% in the previous year. This decrease was largely due to higher benefit costs and workers' compensation expenses, which accounted for 9.1% and 17.8% of revenue, respectively.

BBSI's balance sheet showed total assets of $711.3 million as of June 30, 2026, down from $779.1 million at the end of 2025. Current liabilities increased slightly to $407.9 million, while total liabilities decreased to $507.5 million. The company’s stockholders' equity also declined to $203.8 million from $241.0 million, reflecting a reduction in retained earnings due to the net loss incurred in the first half of the year.

Looking ahead, BBSI remains focused on its strategy to enhance its service offerings and operational efficiency. The company aims to leverage its decentralized organizational structure to better align with the needs of small and mid-sized business owners. Despite the challenges faced in the first half of 2026, BBSI is optimistic about its ability to navigate market conditions and continue to provide value to its clients. The company has not reported any significant changes in its operational strategy or organizational structure but remains vigilant in monitoring economic conditions and client needs.