CBIZ’s first quarter results were met with a negative market reaction, as revenue growth lagged behind Wall Street expectations despite a substantial year-on-year increase driven by the Marcum acquisition. Management attributed the shortfall partly to the anticipated wind-down of special project work and client losses resulting from conflicts post-acquisition. CEO Jerry Grisko emphasized the company's resilient business model, noting, “approximately 77% of our services are essential and recurring,” which helped sustain earnings even as discretionary, project-based work softened. The company’s Benefits and Insurance segment performed well, but softness in capital markets and nonrecurring advisory services weighed on overall revenue.
Is now the time to buy CBZ? Find out in our full research report (it’s free).
CBIZ (CBZ) Q1 CY2025 Highlights:
- Revenue: $838 million vs analyst estimates of $860.2 million (69.5% year-on-year growth, 2.6% miss)
- Adjusted EPS: $2.29 vs analyst estimates of $2.11 (8.7% beat)
- Adjusted EBITDA: $237.6 million vs analyst estimates of $219.5 million (28.4% margin, 8.3% beat)
- The company dropped its revenue guidance for the full year to $2.88 billion at the midpoint from $2.93 billion, a 1.7% decrease
- Management reiterated its full-year Adjusted EPS guidance of $3.63 at the midpoint
- EBITDA guidance for the full year is $453 million at the midpoint, in line with analyst expectations
- Operating Margin: 23.9%, up from 22.1% in the same quarter last year
- Market Capitalization: $3.66 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions CBIZ’s Q1 Earnings Call
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Christopher Moore (CJS Securities) asked about which nonrecurring service lines would be most affected if revenue trends weaken. CEO Jerry Grisko pointed to capital markets and deal-related advisory work as especially sensitive to macroeconomic uncertainty.
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Moore (CJS Securities) inquired about the outlook for government healthcare consulting given recent growth. Grisko said the business is well positioned due to increased demand for compliance and cost containment services from government clients.
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Moore (CJS Securities) requested a breakdown of integration costs and their expected duration. Grisko estimated a majority of $75 million in costs would be incurred in 2025, with significant technology expenses continuing into the following year.
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Andrew Nicholas (William Blair) sought clarification on the rationale for the widened revenue guidance range. Grisko explained it reflects both known headwinds (such as client conflicts) and the unpredictable nature of project-based work in the current climate.
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Marc Riddick (Sidoti) asked about the impact and timing of client conflicts post-acquisition. Grisko stated most conflicts and related client losses have already occurred and were within expectations modeled during the acquisition.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) the pace and effectiveness of Marcum integration—especially technology and office consolidation milestones, (2) stabilization or improvement in discretionary project-based revenue streams tied to capital markets and private equity activity, and (3) realization of planned synergies and cost savings. In addition, the ongoing performance of core recurring service lines will be a key signpost for overall resilience.
CBIZ currently trades at $68.17, down from $77.25 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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