Executive Summary

Q1 2025 delivered strong profitability despite macro softness: revenue $838.0M (+69.5% YoY), operating income $200.0M (23.9% margin), GAAP diluted EPS $1.91, and adjusted diluted EPS $2.29; adjusted EBITDA doubled to $237.6M .
The company widened FY25 revenue guidance to $2.80–$2.95B (from $2.90–$2.95B) while maintaining adjusted EPS ($3.60–$3.65) and adjusted EBITDA ($450–$456M) targets; effective tax rate ~29% and diluted share count 64.5–65.0M reiterated .
Results compared to consensus: revenue modest miss, while adjusted EPS and adjusted EBITDA were beats; management cited known headwinds (SPAC wind-down, client conflicts, divestiture) and macro-driven capital markets/advisory softness for the revenue gap .
Integration of Marcum is on schedule with high retention; management emphasized pricing discipline, variable cost levers, and secular strength in Benefits & Insurance and government health care consulting as earnings support .

What Went Well and What Went Wrong

What Went Well

“Adjusted EBITDA doubled” (+100%) and adjusted EPS rose +40.5% YoY, demonstrating margin leverage post-Marcum and disciplined cost controls .
Core recurring accounting/tax services performed as expected through busy season, with ~77% of services essential and recurring—underpinning resilience in a volatile environment .
Benefits & Insurance grew revenue to $113.0M (+4%) with adjusted EBITDA margin of 27% (+~150 bps), and government health care consulting posted “very strong” growth and a strong pipeline .

What Went Wrong

Nonrecurring/discretionary services (≈23% of revenue) softened amid macro/geopolitical uncertainty (capital markets pause, tariffs impact), prompting widened revenue guidance .
Known revenue headwinds: SPAC activity wind-down, healthcare practice conflicts between Marcum and CBIZ, and prior KA consulting sale—together ~$30M impact in Q1 .
Higher interest expense (+$21M YoY) and a higher effective tax rate (~+300 bps) compressed drop-through from EBITDA to EPS (GAAP EPS $1.91) .

Financial Results

Headline Metrics vs Prior Periods

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$438.9	$460.3	$838.0
GAAP Diluted EPS ($)	$0.70	$(1.53)	$1.91
Adjusted Diluted EPS ($)	$0.84	$(0.20)	$2.29
Operating Income ($USD Millions)	$49.7	$(106.7)	$200.0
Gross Margin %	16.6%	(13.4%)	27.2%

Notes: Q4 seasonality amplified by Marcum close in November and related transaction/integration costs .

Estimates vs Actual (Q1 2025)

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$860.25*	$838.01	Miss (~-2.6%)*
Adjusted Diluted EPS ($)	$2.11*	$2.29	Beat (~+8.7%)*
Adjusted EBITDA ($USD Millions)	$219.46*	$237.62	Beat (~+8.3%)*

Values retrieved from S&P Global.
Interpretation: Modest top-line miss offset by stronger profitability; management cited known items and macro-driven softness .

Segment Breakdown (Q1 2025 vs Q1 2024)

Segment	Revenue Q1 2024 ($M)	Revenue Q1 2025 ($M)	Gross Margin Q1 2024 ($M)	Gross Margin Q1 2025 ($M)
Financial Services	$372.6	$713.7	$107.1	$203.2
Benefits & Insurance Services	$108.4	$113.0	$24.8	$27.6
National Practices	$13.3	$11.4	$1.3	$1.1
Total	$494.3	$838.0	$117.8	$228.1

KPIs and Balance Sheet Highlights

KPI	Q4 2024	Q1 2025
Days Sales Outstanding (DSO)	73	96
Debt to Equity	78.6%	79.8%
Total Debt, net ($USD Millions)	ST: $66.2; LT: $1,333.8	ST: $66.2; LT: $1,462.5
Cash, Cash Equivalents & Restricted Cash ($USD Millions)	$187.2	$149.3
Net Cash from Operating Activities ($USD Millions)	N/A (quarterly not provided)	$(88.3)

Operational note: Seasonal working capital usage peaks in Q1; debt capacity ~$385M unused on $2.0B facility .

Guidance Changes

Metric	Period	Previous Guidance (Feb 26, 2025)	Current Guidance (Apr 24, 2025)	Change
Total Revenue	FY 2025	$2.90–$2.95B	$2.80–$2.95B	Lowered low end
GAAP Diluted EPS	FY 2025	$1.97–$2.02	$1.97–$2.02	Maintained
Adjusted Diluted EPS	FY 2025	$3.60–$3.65	$3.60–$3.65	Maintained
Adjusted EBITDA	FY 2025	$450–$456M	$450–$456M	Maintained
Effective Tax Rate	FY 2025	~29%	~29%	Maintained
Diluted Share Count	FY 2025	64.5–65.0M	64.5–65.0M	Maintained

Rationale: Widened revenue range reflects limited visibility in nonrecurring services amid macro/geopolitical uncertainty; earnings range preserved via variable cost levers and pricing .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Macro/capital markets	Q3: advisory stronger but project-based; transaction costs for Marcum; caution on election/geopolitics	Capital markets pause; tariffs impacting deal flow; widened revenue guide	Softening in nonrecurring
Pricing discipline	Pricing drove majority of organic growth; formal tools embedded	Continued yield lift; benefits margins expanded	Positive, sustained
Government healthcare consulting	Strong growth and new projects	“Very strong” growth; tailwinds from compliance/cost containment	Strengthening
Marcum integration & synergies	IMO established; scale benefits; synergies targeted over multi-years	On schedule; tech systems unification next; ~$25M synergies mostly year 2+	Executing; benefits ahead
Leverage/capital allocation	New $2.0B facility; deleveraging plan to ~2x in 24 months	Leverage ~4x at Q1; plan to 2–2.5x by end-2026; ROFR on Marcum share resales	Deleveraging path intact
Nonrecurring mix	Advisory/PE episodic; Q3 strength despite headwinds	Nonrecurring ~23% of revenue; visibility limited	Heightened sensitivity

Management Commentary

“Approximately 77% of our services are essential and recurring… our operating model enables us to deliver strong earnings and cash flow in varying business climates.” — CEO Jerry Grisko .
“We are pleased to confirm and maintain our previously announced guidance for adjusted EBITDA and adjusted EPS… we are widening our revenue guidance to be within a range of $2.8 billion to $2.95 billion.” — CEO Jerry Grisko .
“Adjusted EBITDA doubled… reflecting the strong margin and scale attributes of our business model as well as the meaningful accretive impact of the acquisition.” — CFO Brad Lakhia .
“Nonrecurring services now represent approximately 23% of our revenue… we now expect full year 2025 revenue to be within a range of $2.8 billion to $2.95 billion.” — CFO Brad Lakhia .
“A major area of focus in the months ahead will be the integration of our technology systems… enabling operational improvements, process standardization and greater value.” — CEO Jerry Grisko .

Q&A Highlights

Nonrecurring exposure: Capital markets and deal-related work are main swing factors; tariffs and uncertainty can pause activity month-to-month .
Government health care consulting: Strong growth expected, potential to benefit if federal workforce reductions increase reliance on external partners .
Integration costs: ~$75M in 2025 (ex-facilities) with IT-related portions into 2026; facility optimization costs likely more pronounced in 2026 .
Revenue guide context: Low end contemplates continuation of Q1 softness and analogs to COVID-era discretionary declines (10%–15% on project work) .
Protecting earnings: Variable comp accruals reversed if growth slows; hiring moderated; discretionary opex (T&E, advertising) flexed; outsourcing benefits—roughly “two-thirds people costs, one-third discretionary” levers .
Capital allocation and shares: Focus on deleveraging; ~4.4M shares from Marcum become sale-eligible May 1, 2025, with ROFR; authorized to repurchase up to 5M shares .

Estimates Context

Q1 2025 vs consensus: revenue modest miss; adjusted EPS and adjusted EBITDA beats (see table above). Values retrieved from S&P Global.
With widened FY revenue range but maintained EPS/EBITDA, Street models may shift mix assumptions—lower top-line for discretionary/advisory offset by margin resilience and cost flex. Management’s focus on adjusted EBITDA margin improvement targets (20–50 bps per year) provides an anchor for forward estimates .

Key Takeaways for Investors

Earnings quality resilient: despite revenue visibility challenges, management reaffirmed adjusted EPS/EBITDA guidance, supported by pricing discipline and variable cost levers .
Revenue sensitivity concentrated in nonrecurring work (~23% of mix); catalysts include capital markets recovery, improved tariff clarity, and PE deal flow resumption .
Integration on schedule: technology platform unification and cross-sell (especially B&I into Marcum clients) are medium-term earnings drivers; ~$25M synergies mostly year 2+ .
Balance sheet strategy: deleveraging trajectory to ~2–2.5x by 2026 with strong cash generation; watch seasonal working capital usage (Q1) and earn-out payments cadence .
Share dynamics: Marcum share release schedule and ROFR could create technical overhang; buyback authorization provides flexibility .
Government health care consulting and Benefits & Insurance offer defensive growth pillars amid macro uncertainty .
Near-term trading: widened revenue range may pressure headline multiples, but maintained EPS/EBITDA and integration progress are supportive; catalysts include improved capital markets activity and integration milestones.

CBIZ, Inc. (CBZ)·Q1 2025 Earnings Summary