Barrett Business Services Q3 profit falls to $16.8M
Revenue and gross billings grew year over year, while quarterly net income and diluted earnings per share were lower.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Barrett Business Services (BBSI) reported third-quarter 2026 revenue of $334.1 million, up 5% from $318.9 million a year earlier, and gross billings of $2.40 billion, up 3% from $2.32 billion. Average worksite employees grew 0.6%. Net income was $16.8 million, compared with $20.6 million; diluted earnings per share were $0.69, versus $0.79.
Gross margin was 3.0% of gross billings, versus 3.3% a year earlier; workers’ compensation was 2.4%, versus 2.2%. Workers’ compensation expense included $0.8 million of favorable prior-year liability and premium adjustments, compared with $3.9 million in Q3 2025. A $11.6 million tax-effected charge related to disallowed prior-year wage-based tax credits was recorded in Q1 and excluded from non-GAAP measures.
At September 30, unrestricted cash and investments were $73.7 million, and BBSI was debt free. It repurchased $9.0 million of common stock, comprising 273,695 shares at an average price of $33.01; approximately $31.2 million remained under its $100 million program. The board declared a $0.08 quarterly dividend payable December 4 to stockholders of record November 20. Its 2026 outlook includes gross billings growth of 3% to 4% and average WSE growth of 1% to 2%.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointRevenue increased 5% to $334.1 million in the third quarter.
Negative
- Moderate pointQuarterly net income was $16.8 million, compared with $20.6 million a year earlier.
Filing Explained
Alongside its 2026 growth targets, BBSI forecasts gross margin of
8-K Event Classification
Key Figures
Key Terms
Gross billings financial
WSEs technical
Non-GAAP net income financial
PEO services technical
Earnings Snapshot
For 2026: gross billings growth of 3% to 4%; average WSE growth of 1% to 2%; gross margin of 2.70% to 2.75% of gross billings; effective annual tax rate of 26% to 27%, excluding the one-time charge related to prior-year tax credits.
FAQ
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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Registrant’s Telephone Number, Including Area Code: |
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On November 4, 2026, Barrett Business Services, Inc. (the “Company”), issued a news release announcing its financial results for the third quarter ended September 30, 2026. The release also provides management’s expectations for certain key performance metrics for 2026. A copy of the news release is furnished as Exhibit 99.1 to this report and incorporated by reference.
Item 7.01. Regulation FD Disclosure.
On November 4, 2026, the Company announced that its Board of Directors has declared a regular quarterly cash dividend of $0.08 per share. The dividend is payable on December 4, 2026 to all stockholders of record as of November 20, 2026.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Description |
99.1 |
News Release dated November 4, 2026* |
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Furnished herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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BARRETT BUSINESS SERVICES, INC. |
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By: |
/s/ Anthony J. Harris |
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Anthony J. Harris |
EXHIBIT 99.1
BBSI Reports Third Quarter 2026 Financial Results
- Revenues up 5% to $334.1 Million and Gross Billings up 3% to $2.40 Billion -
VANCOUVER, Washington, November 4, 2026 – Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the third quarter ended September 30, 2026.
Third Quarter 2026 Financial Summary vs. Year-Ago Quarter
“BBSI delivered third quarter results in line with our expectations, reflecting continued execution against our controllable growth initiatives and disciplined operational management,” said Gary Kramer, President and CEO of BBSI. “Although client hiring trends remain soft, we are encouraged by improving conditions in the workers’ compensation market and our continued ability to secure rate increases. Combined with consistent execution across our controllable growth initiatives, these trends position us to build on our operating foundation as we move into 2027. We remain focused on disciplined growth, delivering value to our clients and strengthening our platform for long-term success.”
Third Quarter 2026 Financial Results
Revenues in the third quarter of 2026 increased 5% to $334.1 million compared to $318.9 million in the third quarter of 2025.
Total gross billings in the third quarter of 2026 increased 3% to $2.40 billion compared to $2.32 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 2.4% in the third quarter of 2026, which included favorable prior year liability and premium adjustments of $0.8 million. This compares to 2.2% in the third quarter of 2025, which included favorable prior year liability and premium adjustments of $3.9 million.
Net income for the third quarter of 2026 was $16.8 million, or $0.69 per diluted share, compared to net income of $20.6 million, or $0.79 per diluted share, in the year-ago quarter.
Liquidity
As of September 30, 2026, unrestricted cash and investments were $73.7 million compared to $67.9 million as of June 30, 2026. BBSI remained debt free at quarter end.
1
Capital Allocation
Continuing under the Company’s stock repurchase program established in August 2025, BBSI repurchased $9.0 million of common stock in the third quarter, comprising 273,695 shares at an average price of $33.01. At September 30, 2026, approximately $31.2 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 December 4, 2026, to all stockholders of record as of November 20, 2026.
Through a combination of stock repurchases and dividends, year-to-date capital returned to shareholders totaled more than $50 million.
Outlook
The calendar-year outlook for 2026 is as follows:
Conference Call
BBSI will conduct a conference call on Wednesday, November 4, 2026, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the third quarter ended September 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, November 4, 2026
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-800-717-1738
International dial-in number: 1-646-307-1865
Conference ID: 1199707
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 December 4, 2026.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 1199707
2
Key Performance Metrics and Non-GAAP Financial Measures
During the first quarter of 2026, the Company recorded tax-effected charges of $11.6 million related to the disallowance of certain wage-based tax credits claimed in prior years. This charge was recorded within provision for income taxes on our condensed consolidated statements of operations. We have excluded this charge from our non-GAAP measures as it relates to prior periods and is not indicative of our current or future operational performance.
The reconciliation of net income and diluted income per share to non-GAAP net income and non-GAAP diluted income per share for the nine months ended September 30, 2026 is shown in the table below (in thousands, except per share amounts):
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(Unaudited) |
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Nine Months Ended |
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September 30, |
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2026 |
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Net Income |
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Diluted Income Per Share |
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GAAP net income |
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$ |
14,817 |
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$ |
0.60 |
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Non-recurring tax adjustment |
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11,565 |
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0.46 |
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Non-GAAP net income |
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$ |
26,382 |
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$ |
1.06 |
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Weighted average number of |
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24,830 |
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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 nine months ended September 30, 2026 and 2025.
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(Unaudited) |
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(Unaudited) |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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(in thousands) |
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2026 |
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2025 |
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2026 |
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2025 |
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Gross billings |
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$ |
2,395,362 |
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$ |
2,321,852 |
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$ |
6,849,493 |
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$ |
6,644,993 |
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PEO and staffing wages |
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$ |
2,074,863 |
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$ |
2,017,499 |
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$ |
5,923,756 |
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$ |
5,766,932 |
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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.
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(Unaudited) |
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(Unaudited) |
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Percentage of Gross Billings |
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Percentage of Gross Billings |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
PEO and staffing wages |
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86.6% |
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86.9% |
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86.5% |
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86.8% |
Payroll taxes |
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6.7% |
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6.7% |
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7.2% |
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7.2% |
Benefit costs |
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1.3% |
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0.9% |
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1.3% |
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0.9% |
Workers' compensation |
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2.4% |
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2.2% |
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2.4% |
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2.2% |
Gross margin |
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3.0% |
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3.3% |
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2.6% |
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2.9% |
3
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.
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(Unaudited) |
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Three Months Ended September 30, |
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2026 |
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Year-over-year |
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2025 |
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Year-over-year |
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Average WSEs |
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142,319 |
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0.6% |
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141,492 |
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6.1% |
Ending WSEs |
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142,020 |
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1.1% |
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140,409 |
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5.8% |
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(Unaudited) |
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Nine Months Ended September 30, |
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2026 |
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Year-over-year |
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2025 |
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Year-over-year |
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Average WSEs |
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139,067 |
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1.0% |
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137,640 |
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7.2% |
Ending WSEs |
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142,020 |
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1.1% |
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140,409 |
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5.8% |
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.
4
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 implementation and 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.
5
Barrett Business Services, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
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September 30, |
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December 31, |
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(in thousands) |
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2026 |
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2025 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
46,098 |
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$ |
95,033 |
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Investments |
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27,637 |
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62,154 |
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Trade accounts receivable, net |
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328,730 |
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248,626 |
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Income taxes receivable |
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952 |
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2,965 |
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Prepaid expenses and other |
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24,655 |
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18,652 |
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Restricted cash and investments |
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65,342 |
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97,210 |
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Total current assets |
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493,414 |
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524,640 |
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Property, equipment and software, net |
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76,829 |
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67,230 |
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Operating lease right-of-use assets |
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21,777 |
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23,218 |
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Restricted cash and investments |
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97,796 |
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106,216 |
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Goodwill |
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47,820 |
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47,820 |
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Other assets |
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|
8,136 |
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|
9,869 |
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Deferred income taxes |
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|
811 |
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|
74 |
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Total assets |
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$ |
746,583 |
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$ |
779,067 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
6,488 |
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$ |
7,433 |
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Accrued payroll and related benefits |
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305,266 |
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237,783 |
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Payroll taxes payable |
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|
49,318 |
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62,463 |
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Current operating lease liabilities |
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7,070 |
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|
6,969 |
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Current premium payable |
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8,703 |
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38,992 |
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Other accrued liabilities |
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|
9,032 |
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19,357 |
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Workers' compensation claims liabilities |
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31,247 |
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32,875 |
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Total current liabilities |
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417,124 |
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405,872 |
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Long-term workers' compensation claims liabilities |
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65,005 |
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75,709 |
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Long-term premium payable |
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|
26,177 |
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|
26,025 |
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Long-term operating lease liabilities |
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15,953 |
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17,484 |
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Customer deposits and other long-term liabilities |
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14,565 |
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12,977 |
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Stockholders' equity |
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|
207,759 |
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|
|
241,000 |
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Total liabilities and stockholders' equity |
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$ |
746,583 |
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$ |
779,067 |
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6
Barrett Business Services, Inc.
Consolidated Statements of Operations
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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(in thousands, except per share amounts) |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues: |
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Professional employer services |
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$ |
316,212 |
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$ |
299,685 |
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$ |
914,178 |
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$ |
864,781 |
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Staffing services |
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17,850 |
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19,264 |
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46,157 |
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|
|
54,391 |
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Total revenues |
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334,062 |
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|
318,949 |
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960,335 |
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919,172 |
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Cost of revenues: |
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Direct payroll costs |
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13,624 |
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14,604 |
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34,740 |
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|
41,075 |
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Payroll taxes |
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|
160,742 |
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|
|
156,040 |
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|
493,003 |
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|
480,456 |
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Benefit costs |
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|
29,104 |
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|
|
20,230 |
|
|
|
85,470 |
|
|
|
56,097 |
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Workers' compensation |
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|
57,921 |
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|
|
51,310 |
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|
|
166,412 |
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|
|
148,896 |
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Total cost of revenues |
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|
261,391 |
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|
|
242,184 |
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|
|
779,625 |
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|
726,524 |
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Gross margin |
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|
72,671 |
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|
|
76,765 |
|
|
|
180,710 |
|
|
|
192,648 |
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Selling, general and administrative expenses |
|
|
48,881 |
|
|
|
49,886 |
|
|
|
143,555 |
|
|
|
142,912 |
|
Depreciation and amortization |
|
|
2,559 |
|
|
|
2,097 |
|
|
|
6,989 |
|
|
|
6,093 |
|
Income from operations |
|
|
21,231 |
|
|
|
24,782 |
|
|
|
30,166 |
|
|
|
43,643 |
|
Other income (expense): |
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|
|
|
|
|
|
|
|
|
|
|
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Investment income, net |
|
|
1,243 |
|
|
|
1,983 |
|
|
|
5,175 |
|
|
|
6,903 |
|
Interest expense |
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|
(43 |
) |
|
|
(45 |
) |
|
|
(127 |
) |
|
|
(133 |
) |
Other, net |
|
|
102 |
|
|
|
32 |
|
|
|
204 |
|
|
|
131 |
|
Other income, net |
|
|
1,302 |
|
|
|
1,970 |
|
|
|
5,252 |
|
|
|
6,901 |
|
Income before income taxes |
|
|
22,533 |
|
|
|
26,752 |
|
|
|
35,418 |
|
|
|
50,544 |
|
Provision for income taxes |
|
|
5,783 |
|
|
|
6,133 |
|
|
|
20,601 |
|
|
|
12,492 |
|
Net income |
|
$ |
16,750 |
|
|
$ |
20,619 |
|
|
$ |
14,817 |
|
|
$ |
38,052 |
|
Basic income per common share |
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$ |
0.69 |
|
|
$ |
0.80 |
|
|
$ |
0.60 |
|
|
$ |
1.48 |
|
Weighted average number of basic common shares |
|
|
24,135 |
|
|
|
25,688 |
|
|
|
24,505 |
|
|
|
25,696 |
|
Diluted income per common share |
|
$ |
0.69 |
|
|
$ |
0.79 |
|
|
$ |
0.60 |
|
|
$ |
1.45 |
|
Weighted average number of diluted common shares |
|
|
24,419 |
|
|
|
26,171 |
|
|
|
24,830 |
|
|
|
26,263 |
|
Investor Relations:
Gateway Group, Inc.
Cody Slach
Tel 1-949-574-3860
BBSI@gateway-grp.com
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