CBIZ Q1 Earnings Call Highlights

Key Points

• CBIZ reported Q1 revenue of $849 million (+1.3% YoY) with adjusted EBITDA of $244 million and adjusted EPS of $2.50, and management reaffirmed 2026 revenue and FCF targets while raising adjusted EPS guidance to $4.00–$4.10.
• Free cash flow improved by $64 million year‑over‑year, enabling about $63 million of share repurchases (~2 million shares YTD) and lowering net leverage to ~3.4x versus ~3.9x a year ago, with a target of <2.5x in 2027.
• Management is pushing AI and offshoring to drive efficiency and margin expansion—AI pilots show ~20% first‑year efficiency (potentially ~40% later) and offshore hours are planned to rise from ~6% in 2025 to 10% in 2026 (targeting >20% longer term); they also said ~200 bps of reported organic growth was temporarily lost to client exits and integration effects that should abate by H2.

CBIZ NYSE: CBZ reported first-quarter 2026 results that management said were in line with expectations, with year-over-year increases in revenue, profitability, and free cash flow, alongside continued share repurchases and progress on integration and efficiency initiatives.

First-quarter results and organic growth trends

President and CEO Jerry Grisko said the company entered 2026 with “a clear plan,” and that organic growth improved throughout the quarter and was up sequentially compared with the fourth quarter of 2025. He added that CBIZ remains confident it will “exit the year growing at our mid-single-digit organic growth target rate.”

Chief Financial Officer Brad Lakhia reported consolidated revenue increased 1.3% year over year to $849 million, with organic revenue growth of 1%. Adjusted EBITDA rose $3 million to $244 million, and adjusted EBITDA margin increased 10 basis points. Adjusted diluted EPS was $2.50 versus $2.33 in the prior-year quarter.

Grisko noted that first-quarter financial services organic growth continued to face headwinds tied to prior client exits related to risk and profitability standards and integration-related productivity impacts that shifted some tax revenue into the back half of the year. He said CBIZ estimated those temporary factors reduced reported organic revenue growth by roughly 200 basis points in the quarter and expects the impacts to abate by the second half.

Segment performance: Financial Services and Benefits & Insurance

Lakhia said Financial Services revenue increased 2.1% year over year, with reported organic growth of 1.8%, driven by strength across core accounting, tax, and advisory. He reiterated that transitory integration-related client attrition reduced first-quarter Financial Services revenue by about 200 basis points; excluding that impact, organic growth would have been approximately 4%.

In Benefits and Insurance (B&I), first-quarter revenue was $108 million, down 4% year over year. Lakhia said the decline was expected due to tough comparisons on project-related work and contingent commissions, with contingent commission declines “primarily driven by client attrition that occurred in 2025.” He added that part of the decline was driven by the “unexpected departure of a single producer and his team in February,” which he described as isolated, and said the company does not anticipate similar departures. Lakhia said the recurring portion of the B&I business “when normalized for the producer departure, was up approximately 4% in the quarter.”

On the cost side, Lakhia said B&I adjusted EBITDA was impacted by the flow-through from lower non-recurring revenue items and by planned incremental marketing investments supporting growth initiatives.

AI, technology investments, and competitive positioning

CBIZ spent part of the call discussing its AI roadmap and related investments. Grisko framed AI as an opportunity to drive efficiency gains and margin expansion, while reinforcing the company’s role in regulated, professional services environments. He said CBIZ’s value-based pricing model positions the firm to benefit from AI-driven efficiencies.

Chief Information and Technology Officer Peter Scavuzzo said CBIZ has been building the foundation for AI deployment over the last several quarters and is now entering “the next phase,” including a company-wide rollout of “more advanced agentic AI solutions” after busy season. Scavuzzo said the company is using AI to reduce manual, repetitive tasks, which he said supports retention and talent recruitment.

Scavuzzo cited an example from a test service in which an AI-based data extraction workflow is producing “20% efficiency” in year one, with an expectation that efficiency could grow to “40%” in subsequent years. He also described AI-driven workflows intended to improve the speed, quality, and consistency of RFP responses, allowing CBIZ to pursue opportunities it previously could not due to resource constraints.

During Q&A, Scavuzzo was asked whether clients could use AI tools to unbundle services or pressure pricing. He responded that he does not believe tools can provide the “expertise and knowledge we can offer in the profession,” emphasizing that regulated environments require CBIZ’s professional accountability and experience. Grisko also said the company was not seeing meaningful pricing pressure tied to AI and technology, adding that clients expect CBIZ to gain efficiencies from sources such as offshoring, AI, and automation under its value-based pricing approach.

Addressing competitive dynamics, Grisko said CBIZ’s scale enables investments smaller competitors cannot make, creating an opportunity to take share in the middle market. Scavuzzo added that AI and automation are “strengthening our position, and not weakening it.”

Offshoring, cash flow, and capital allocation

Grisko said offshoring remains “a meaningful opportunity,” with CBIZ on track to increase offshore hours from about 6% in 2025 to 10% in 2026, supported by delivery partners in the Philippines and India. He said CBIZ plans over the next several years to expand hours completed outside the U.S. to more than 20%, which he said is consistent with comparable companies and could drive growth and margin opportunities over time.

Lakhia highlighted free cash flow improved $64 million year over year, “primarily due to $53 million of proceeds received from the final purchase price adjustment.” He said that improvement balanced typical seasonal working capital use and supported about $63 million in share repurchases through the end of April. Net leverage declined to about 3.4 times from about 3.9 times at the end of the first quarter of 2025, driven primarily by growth in pro forma adjusted EBITDA and modestly lower debt levels.

Lakhia said the weighted average fully diluted share count (including future acquisition-related shares) declined by 2.6 million shares year over year. Through April year-to-date, CBIZ repurchased approximately 2 million shares through open market transactions and under its right of first refusal program. He also reiterated the company’s leverage target of less than 2.5 times in 2027 and said management views repurchases at current valuation levels as “highly accretive” and intends to remain active and opportunistic.

Guidance reaffirmed; adjusted EPS outlook raised

Management reaffirmed its revenue, adjusted EBITDA, and free cash flow targets for 2026 while raising adjusted EPS guidance. Lakhia said CBIZ continues to expect revenue of $2.8 billion to $2.9 billion (2% to 5% year-over-year growth). Adjusted EBITDA guidance was updated to $465 million to $475 million to incorporate a comparative stock-based compensation adjustment, while free cash flow guidance remained $270 million to $290 million, representing 60% conversion at the midpoint of adjusted EBITDA guidance.

Adjusted EPS guidance increased to $4.00 to $4.10, reflecting a lower share count from repurchases through April and the stock-based compensation adjustment, assuming a weighted average fully diluted share count of about 60.5 million.

On demand, Grisko said advisory market conditions remained favorable, citing “notable wins across risk advisory, credit risk, valuation, and private equity” and increased activity in the capital markets group as more clients evaluate transactions. He added that CBIZ has a favorable pipeline across Financial Services and B&I, and said it is the company’s expectation that revenue growth will improve each quarter through the year.

About CBIZ NYSE: CBZ

CBIZ, Inc NYSE: CBZ, founded in 1996 and headquartered in Cleveland, Ohio, is a leading provider of professional business services in the United States. Since its inception, the company has grown through both organic expansion and strategic acquisitions to deliver a broad spectrum of financial, tax and advisory solutions tailored to the needs of small to mid-market organizations.

Through its Financial & Advisory Services segment, CBIZ offers accounting, tax preparation and compliance, audit support, and wealth management services.

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