Executive Summary

Q3 2025 delivered mixed results: Adjusted EPS of $1.01 rose 8.5% YoY and beat S&P Global consensus, while revenue of $693.8M grew 58.1% YoY but came in modestly below consensus; management maintained full-year revenue, adjusted EPS, and adjusted EBITDA guidance .
EPS beat drivers included lower incentive compensation, stronger scale benefits, and tax planning; interest expense rose sharply YoY on higher debt from the Marcum acquisition .
Revenue softness versus consensus was concentrated in Benefits & Insurance amid a soft P&C market; advisory demand improved versus the first half and core accounting/tax remained resilient .
Catalysts into Q4/FY: synergy target raised to $50M+, operational excellence initiative to improve utilization, and improved market conditions supporting discretionary advisory; integration costs for 2025 increased to $89M to accelerate streamlining .

What Went Well and What Went Wrong

What Went Well

Adjusted EPS of $1.01 (+8.5% YoY) beat Wall Street consensus; adjusted EBITDA rose 57.4% YoY to $120.0M as scale benefits and lower incentive comp supported margins .
Financial Services segment revenue rose ~80% YoY to $579M; pricing exhibited mid-single-digit rate increases exceeding inflation, with improved advisory demand versus H1 .
Management highlighted stronger-than-expected synergy capture and strategic progress: “We have updated our synergy goal from the acquisition to a total of $50 million or more…expect to realize $35 million in synergies this year” .

What Went Wrong

GAAP EPS of $0.48 declined 31.4% YoY, reflecting materially higher interest expense ($28M vs. $5M YoY) on acquisition financing and integration-related adjustments .
Benefits & Insurance segment was soft, tied to a weak P&C market and discretionary project softness, partially offsetting strength in core accounting/tax .
2025 integration costs were lifted by $14M to $89M, largely severance-related; real estate consolidation work (a key synergy lever) remains ahead, delaying some cost take-out to 2026 .

Financial Results

Consolidated trends: Q1 → Q2 → Q3 2025

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$838.0	$683.5	$693.8
GAAP Diluted EPS ($)	$1.91	$0.66	$0.48
Adjusted Diluted EPS ($)	$2.29	$0.95	$1.01
Adjusted EBITDA ($USD Millions)	$237.6	$117.2	$120.0
Gross Margin %	27.2%	12.9%	13.0%
Operating Income ($USD Millions)	$200.0	$60.3	$58.9
Operating Margin %	23.9%	8.9%	8.5%
Interest Expense ($USD Millions)	$25.2	$27.9	$28.0
Net Income ($USD Millions)	$122.8	$41.9	$30.1

Year-over-year: Q3 2025 vs Q3 2024

Metric	Q3 2024	Q3 2025
Revenue ($USD Millions)	$438.9	$693.8
GAAP Diluted EPS ($)	$0.70	$0.48
Adjusted Diluted EPS ($)	$0.93	$1.01
Adjusted EBITDA ($USD Millions)	$76.3	$120.0
Gross Margin %	16.6%	13.0%
Operating Income ($USD Millions)	$49.7	$58.9

Segment breakdown (Q3)

Segment	Revenue Q3 2024 ($M)	Revenue Q3 2025 ($M)	Gross Margin Q3 2024 ($M)	Gross Margin Q3 2025 ($M)
Financial Services	$322.3	$578.5	$61.7	$94.7
Benefits & Insurance Services	$104.0	$103.4	$21.1	$19.3
National Practices	$12.5	$11.9	$1.45	$1.22
Total	$438.9	$693.8	$72.9	$90.1

KPIs and Balance Metrics (quarter-end)

Metric	Q1 2025	Q2 2025	Q3 2025
DSO (days)	96	87	94
Shares Outstanding (millions)	54.089	54.024	54.104
Total Long-term Debt, net ($M)	$1,462.5	$1,488.2	$1,502.6
Total Short-term Debt, net ($M)	$66.2	$66.3	$66.3
Cash and Cash Equivalents ($M)	$8.85	$39.82	$16.97
Funds Held for Clients ($M)	$140.93	$118.88	$127.78
Debt-to-Equity (%)	79.8%	82.2%	83.8%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue ($B)	FY 2025	$2.8–$2.95	$2.8–$2.95	Maintained
Effective Tax Rate (%)	FY 2025	~29%	~29%	Maintained
Weighted Avg Fully Diluted Shares (M)	FY 2025	64.5–65.0	64.5–65.0	Maintained
GAAP Fully Diluted EPS ($)	FY 2025	$1.97–$2.02	$1.97–$2.02	Maintained
Adjusted Fully Diluted EPS ($)	FY 2025	$3.60–$3.65	$3.60–$3.65	Maintained
Adjusted EBITDA ($M)	FY 2025	$450–$456	$450–$456	Maintained
Integration Costs ($M)	FY 2025	$75 (prior modeling)	$89 (updated)	Raised
Synergy Target ($M)	FY 2025–2026	$25 (original)	$50+ total; $35 in 2025 realized	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
AI/Technology initiatives	Emphasis on technology investments; deepened Suralink relationship (efficiency/collaboration)	Launched “CBIZ Vertical Vector AI” platform; 60+ Transformation & Innovation team; tech/offshoring scale-up	Improving
Pricing and rate realization	Historically mid-single-digit; resilience noted	Mid-single-digit increases exceeding inflation; competing favorably	Stable to Improving
Advisory demand/M&A-sensitive projects	Q1: uncertainty expected to impact non-recurring services	Advisory demand improved vs H1; expecting continued Q4 strength	Improving
Insurance/P&C market	B&I grew modestly in H1	B&I revenues soft due to P&C market and discretionary project softness	Softening
Regulatory/tax environment	Ongoing risk disclosures; tax rate ~29%	OV(B)PA driving client engagement and some revenue lift	Improving
Synergies & integration costs	Initial $25M synergy target; ongoing integration costs	Synergy target raised to $50M+; 2025 integration costs increased to $89M; real estate actions ahead	Improving synergies; near-term cost uptick
Capital allocation/leverage	Maintain investment, deleveraging, opportunistic buybacks	$56M Q3 buybacks; $128M YTD; delever to 2–2.5x now targeted by 2027 due to buybacks	Balanced; delever timeline extended

Management Commentary

“We are seeing strong validation of the Marcum acquisition, including better than expected synergies…well positioned to drive sustainable long-term growth” .
“Adjusted EBITDA margin increased approximately 325 bps YoY…lower incentive compensation expense representing ~250 bps of the improvement” .
“We have updated our synergy goal…to $50 million or more. We expect to realize $35 million in synergies this year…majority of the balance in 2026” .
“Pricing…mid-single digits…above what we’re hearing some competitors…reflects strong client relationships” .
“Benefits & Insurance revenues were a little soft…tied to soft P&C market and discretionary project softness” .

Q&A Highlights

Pricing durability: Management expects mid-single-digit rate realization to persist into 2026 and beyond, exceeding inflation and reflecting service value .
Client/partner retention: No notable loss of rainmaking partners; client retention tracking ahead of modeled conflicts from the acquisition .
Integration cost mix: 2025 integration costs ($89M) skewed to severance; 2026 expected to shift more to facilities/real estate actions .
Macro influences: Rate cuts viewed as supportive to discretionary projects; limited shutdown impact except timing delays in government healthcare consulting .
Pro forma Q4 trajectory: Management suggested ~6–8% YoY pro forma revenue growth adjusting for conflicts and SEC/capital markets bleed-off .

Estimates Context

Metric	Consensus (Q3 2025)	Actual (Q3 2025)	Surprise
Primary EPS ($)	0.897*	1.01	+$0.11 (Beat)*
Revenue ($USD Millions)	709.18*	693.82	-$15.36 (Miss)*

Values marked with an asterisk were retrieved from S&P Global. EBITDA consensus mean was 115.02* vs S&P’s EBITDA actual 102.996*, which may not be directly comparable to company-reported adjusted EBITDA of $120.0M ; definition differences should be considered.*

Key Takeaways for Investors

EPS beat with revenue slightly below consensus; strength in core accounting/tax and improved advisory offset a soft P&C insurance backdrop. Focus near term on discretionary advisory momentum into Q4 .
Margins benefited from lower incentive comp and scale; watch normalization of incentive comp in 2026 and incremental synergies/real estate actions for margin trajectory .
Interest expense remains elevated due to acquisition financing; deleveraging to 2–2.5x now expected by 2027 given opportunistic buybacks .
Synergy target raised to $50M+ (with $35M realized in 2025), a medium-term margin and cash flow lever; execution on real estate consolidation is the next catalyst .
Benefits & Insurance softness tied to P&C market conditions; stabilization or improvement would be upside to revenue mix .
Technology/AI initiatives (Vertical Vector AI, offshoring scale-up) support efficiency and differentiation; monitor adoption and client wins as a secular tailwind .
Near-term trading lens: EPS beat vs revenue miss and maintained FY guidance likely anchor sentiment; estimate revisions should bias toward EPS/margin resilience while revenue expectations may ease given B&I headwinds.*

Values marked with an asterisk were retrieved from S&P Global.

CBIZ, Inc. (CBZ)·Q3 2025 Earnings Summary