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Item 2. Management’s Discussion and Analysis

2025-07-31 compared with 2025-04-25 · 269 added, 121 removed, 207 unchanged (65% of the section changed)

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Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we”, “us”, “our”, "CBIZ" or the "Company" shall mean CBIZ, Inc., and its operating subsidiaries.

The following discussion is intended to assist in the understanding of our financial position at March 31, 2025 and December 31, 2024, results of operations for the three months ended March 31, 2025 and 2024, and cash flows for the three months ended March 31, 2025 and 2024, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2024.

The following discussion is intended to assist in the understanding of our financial position at June 30, 2025 and December 31, 2024, results of operations for the three and six months ended June 30, 2025 and 2024, and cash flows for the six months ended June 30, 2025 and 2024, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2024.

This discussion and analysis contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in “Item 1A.

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We deliver integrated services through three practice groups:

Financial Services, Benefits and

Insurance Services, and National Practices.

Refer to Note 12, Segment Disclosures, to the accompanying unaudited condensed consolidated financial statements for a general description of services provided by each practice group.

Financial Services, Benefits and Insurance Services, and National Practices.

Refer to Note 19, Segment Disclosure to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion on the practice groups.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion of our business and strategies, as well as the external relationships and regulatory factors that currently impact our operations.

EXECUTIVE SUMMARY

Revenue for the three months ended March 31, 2025 increased by $343.7 million, or 69.5%, to $838.0 million from $494.3 million for the same period in 2024.

Revenue from newly acquired operations contributed $333.4 million, or 66.8%, of incremental revenue for the three months ended March 31, 2025, as compared to the same period in 2024.

Revenue for the three months ended June 30, 2025 increased by $263.5 million, or 62.7%, to $683.5 million from $420.0 million for the same period in 2024.

Revenue from newly acquired operations, net of divestitures, contributed $256.2 million, or 60.3%, of incremental revenue for the three months ended June 30, 2025, as compared to the same period in 2024.

A detailed discussion of revenue by practice group is included under "Operating Practice Groups."

Net income was $122.8 million, or $1.91 per diluted share, in the first quarter of 2025, compared to $76.9 million, or $1.53 per diluted share, in the first quarter of 2024.

Revenue for the six months ended June 30, 2025 increased by $607.2 million, or 66.4%, to $1,521.5 million from $914.3 million for the same period in 2024.

Revenue from newly acquired operations, net of divestitures, contributed $589.6 million, or 63.8%, of incremental revenue for the six months ended June 30, 2025 as compared to the same period in 2024.

A detailed discussion of revenue by practice group is included under "Operating Practice Groups".

Net income was $41.9 million, or $0.66 per diluted share, in the second quarter of 2025, compared to $19.8 million, or $0.39 per diluted share, in the second quarter of 2024.

For the six months ended June 30, 2025, Net income was $164.7 million, or $2.58 per diluted share, compared to $96.7 million, or $1.92 per diluted share, for the same period in 2024.

Refer to “Results of Operations" for a detailed discussion of the components of net income.

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Our overall business objective continues to focus on making strategic acquisitions that allow us to strengthen our presence in existing markets, expand into high growth industries, and broaden our services to our existing offerings.

As a result of the Transaction and related 2024 Credit Facilities, we have $1,548.4 million outstanding debt under the 2024 Credit Facilities as of March 31, 2025.

As a result of the Transaction and related 2024 Credit Facilities, we have $1,573.7 million outstanding debt under the 2024 Credit Facilities as of June 30, 2025.

To achieve our business objective of making strategic acquisitions, our current priority for use of capital is to maximize cash flow to pay down debt, which will allow us more liquidity to make strategic acquisitions in the future.

In addition, we believe that repurchasing shares of our common stock can be a prudent use of our financial resources, and that investing in our stock is an attractive use of capital and an efficient means to provide value to our stockholders.

During the three months ended March 31, 2025, we repurchased 0.1 million shares of our common stock for tax withholding purposes at a total cost of approximately $7.7 million.

During the six months ended June 30, 2025, we repurchased 1.0 million shares of our common stock at a cost of $71.3 million under the ROFR Agreement .

Additionally, to settle statutory employee withholding related to vesting of stock awards, we repurchased 0.1 million shares of our common stock at cost of $7.8 million during the six months ended June 30, 2025 and 0.2 million shares at a cost of $11.2 million during the six months ended June 30, 2024.

Refer to Note 10, Common Stock, to the accompanying unaudited condensed consolidated financial statements for further details

On February 11, 2025, the CBIZ Board of Directors authorized the purchase of up to 5.0 million shares of our common stock under our share repurchase program (the “Share Repurchase Program”), which may be suspended or discontinued at any time and expires on March 31, 2026.

The shares may be purchased in the open market, in privately negotiated transactions, and pursuant to Rule 10b5-1 trading plans.

Privately negotiated transactions may include purchases from our employees, officers and directors, in accordance with the Securities and Exchange Commission (the “SEC”) rules.

Privately negotiated transactions may include purchases from our employees, officers and directors, in accordance with the Securities and Exchange Commission ("SEC") rules.

CBIZ management will determine the timing and amount of the purchases based on its evaluation of market conditions and other factors.

RESULTS OF OPERATIONS

The following tables summarize total revenue for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following tables summarize total revenue for the three and six months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Total 2024 % of

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Total CBIZ $ 683,496 100.0 % $ 420,012 100.0 % $ 263,484 62.7 %

A detailed discussion of same-unit revenue by practice group is included under “Operating Practice Groups.”

Six Months Ended June 30,

Total 2024 % of

(Amounts in thousands, except percentages)

Financial Services $ 1,283,480 84.4 % $ 681,863 74.6 % $ 601,617 88.2 %

Benefits and Insurance Services 214,905 14.1 % 205,827 22.5 % 9,078 4.4 %

National Practices 23,125 1.5 % 26,619 2.9 % (3,494) (13.1) %

Total CBIZ $ 1,521,510 100.0 % $ 914,309 100.0 % $ 607,201 66.4 %

Non-qualified Deferred Compensation Plan

We sponsor a Non-qualified Deferred Compensation Plan (the "deferred compensation plan"), under which a CBIZ employee’s compensation deferral is held in a rabbi trust and invested accordingly as directed by the employee.

Income and expenses related to the deferred compensation plan, which are recorded in "Corporate and Other" for segment reporting purposes, are included in “Operating expenses”, “Gross margin” and “Corporate general and administrative expenses” and are directly offset by deferred compensation gains or losses in “Other (expense) income, net” in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income.

Income and expenses related to the deferred compensation plan, which are recorded in "Corporate and Other" for segment reporting purposes, are included in “Operating expenses”, “Gross margin” and “Corporate general and administrative expenses” and are directly offset by deferred compensation gains or losses in “Other income, net” in the accompanying unaudited Condensed Consolidated Statements of Comprehensive Income.

The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share.

Income and expenses related to the deferred compensation plan for the three months ended March 31, 2025 and 2024 are as follows:

Three Months Ended March 31,

Income and expenses related to the deferred compensation plan for the three and six months ended June 30, 2025 and 2024 are as follows:

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

(Amounts in thousands)

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Corporate general & administrative (income) expense 1,458 323 1,339 1,380

Other (expenses) income, net (2,551) 9,633

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended March 31, 2025 and 2024 are as follows:

Three Months Ended March 31,

Other income, net 13,175 2,606 10,624 12,239

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three and six months ended June 30, 2025 and 2024 are as follows:

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Operating income 60,272 13,175 73,447 10.7 % 31,594 2,606 34,200 8.1 %

Other (expense) income , net (1,966) 2,551 585 0.1 % 9,424 (9,633) (209) — %

Other income , net 25,374 (13,175) 12,199 1.8 % 2,483 (2,606) (123) — %

Income before income tax expense 57,779 — 57,779 8.5 % 28,193 — 28,193 6.8 %

Six Months Ended June 30,

(Amounts in thousands, except percentages)

As Reported Deferred Compensation Plan Adjusted % of Revenue As Reported Deferred Compensation Plan Adjusted % of Revenue

Gross margin $ 316,011 $ 9,285 $ 325,296 21.4 % $ 171,456 $ 10,859 $ 182,315 19.9 %

Operating income 260,304 10,624 270,928 17.8 % 130,695 12,239 142,934 15.6 %

Other income , net 23,408 (10,624) 12,784 0.8 % 11,907 (12,239) (332) — %

Income before income tax expense 230,689 — 230,689 15.2 % 132,207 — 132,207 14.5 %

Operating Expenses

The following tables summarize total operating expenses for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following tables summarize total operating expenses for the three and six months ended June 30, 2025 and 2024:

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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compensation % of revenue 85.4 % 86.7 %

Three months ended March 31, 2025 compared to March 31, 2024.

Total operating expenses for the three months ended March 31, 2025 increased by $233.4 million, or 62.0%, to $609.9 million as compared to $376.5 million in the same period of 2024.

The deferred compensation plan decreased operating expenses by $2.4 million for the three months ended March 31, 2025 and increased operating expenses by $8.6 million in the same period in 2024.

Excluding the deferred compensation expenses, which were recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $612.3 million and $367.9 million, or 73.1% and 74.4% of revenue, for the three months ended March 31, 2025 and 2024, respectively.

In addition, operating expenses for the three months ended March 31, 2025 included approximately $9.0 million of integration costs associated with the Transaction, and the operating expenses for the three months ended March 31, 2024 included approximately $0.1 million of non-recurring integration costs associated with the two acquisitions completed in 2024.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Operating expenses by segment:

Financial Services 994,951 $ 528,370 $ 466,581 88.3 %

Benefits and Insurance Services 169,365 166,880 2,485 1.5 %

National Practices 20,746 23,961 (3,215) (13.4) %

Corporate and Other 20,437 23,642 (3,205) (13.6) %

Total Operating expenses $ 1,205,499 $ 742,853 $ 462,646 62.3 %

Operating expenses % of revenue 79.2 % 81.2 %

Operating expenses excluding deferred compensation $ 1,196,214 $ 731,994 $ 464,220 63.4 %

Operating expenses excluding deferred

compensation % of revenue 78.6 % 80.1 %

Three months ended June 30, 2025 compared to June 30, 2024.

Total operating expenses for the three months ended June 30, 2025 increased by $229.2 million, or 62.6%, to $595.6 million as compared to $366.4 million in the same period in 2024.

The deferred compensation plan increased operating expenses by $11.7 million for the three months ended June 30, 2025 and increased operating expenses by $2.3 million in the same period in 2024.

Excluding the deferred compensation expenses, which were recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $583.9 million and $364.1 million, or 85.4% and 86.7% of revenue, for the three months ended June 30, 2025 and 2024, respectively.

In addition, operating expenses for the three months ended June 30, 2025 included approximately $11.1 million of integration costs associated with the Transaction, and the operating expenses for the three months ended June 30, 2024 included approximately $0.2 million of non-recurring integration costs associated with the three acquisitions completed in 2024.

The majority of our operating expenses relate to personnel costs, which include (i) salaries and benefits, (ii) commissions paid to producers, (iii) incentive compensation, and (iv) stock-based compensation.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $244.4 million during the three months ended March 31, 2025 as compared to the same period in 2024, driven by $194.1 million higher personnel costs (of which $193.7 million was attributed to the net impact of acquisitions and divestitures), $15.3 million higher depreciation and amortization costs, $11.4 million higher facility costs, $9.9 million higher direct costs, $5.7 million higher technology costs, $3.9 million higher travel and entertainment costs, $2.1 milli on higher professional service costs, a nd $1.9 million higher marketing costs .

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $219.8 million during the three months ended June 30, 2025 as compared to the same period in 2024, driven by $161.7 million higher personnel costs primarily as a result of the Transaction, $15.6 million higher depreciation and amortization costs, $12.3 million higher facility costs, $12.0

million higher direct costs, $6.5 million higher technology costs, $5.6 million higher travel and entertainment costs, $4.9 milli on higher professional service costs, a nd $1.2 million higher discretionary spending to support business growth .

Personnel costs are discussed in further detail under “Operating Practice Groups” below.

Six Months Ended June 30, 2025 compared to June 30, 2024 .

Total operating expenses for the six months ended June 30, 2025 increased by $462.6 million, or 62.3%, to $1,205.5 million as compared to $742.9 million in the same period in 2024.

The deferred compensation plan decreased operating expenses by $9.3 million for the six months ended June 30, 2025, and increased operating expenses by $10.9 million during the same period in 2024.

Excluding the impact of deferred compensation, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by $464.2 million during the six months ended June 30, 2025 as compared to the same period in 2024.

Operating expense for the six months ended June 30, 2025 included approximately $20.1 million of integration and retention costs associated with the Transaction.

The increase in operating expense was primarily driven by personnel costs increase of $355.8 million primarily as a result of the Transaction, $31.0 million higher depreciation and amortization expense, $23.7 million higher facility costs, $21.9 million higher direct costs, $12.2 million higher technology related costs, $9.5 million higher travel and entertainment costs, $6.9 million higher professional services costs, and $2.8 million higher marketing costs, as well as $0.4 million higher other discretionary spending to support business growth.

Corporate General & Administrative (“G&A”) Expenses

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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G&A expenses excluding deferred compensation % of revenue 3.8 % 5.2 %

Three months ended March 31, 2025 compared to March 31, 2024.

The deferred compensation plan decreased G&A expenses by $0.1 million for the three months ended March 31, 2025, and increased G&A expenses by $1.1 million during the same period in 2024.

The G&A expenses, excluding the impact of the deferred compensation plan, would have been $28.2 million, or 3.4% of revenue, for the three months ended March 31, 2025, compared to $17.7 million, or 3.6% of revenue, for the same period in 2024, an increase of approximately $10.5 million.

The increase was primarily driven by $4.1 million higher legal and other professional services costs largely associated with the Transaction, $2.1 million higher personnel costs, $2.0 million higher other discretionary spending to support business growth, $0.9 million higher insurance costs, $0.6 million higher marketing costs, $0.5 million higher technology costs, and $0.3 million higher travel and entertainment costs.

The G&A expenses for the three months ended March 31, 2025 included approximately $6.7 million of integration costs primarily associated with the Transaction.

For the three months ended March 31, 2024 there were approximately $0.5 million non-recurring transaction and integration costs associated with acquisitions.

Other Income (Expense), Net

Three Months Ended March 31,

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Interest expense $ (25,156) $ (4,511) $ (20,645) 457.7 %

G&A expenses $ 55,707 $ 40,761 $ 14,946 36.7 %

G&A expenses % of revenue 3.7 % 4.5 %

G&A expenses excluding deferred compensation $ 54,368 $ 39,381 $ 14,987 38.1 %

G&A expenses excluding deferred compensation % of revenue 3.6 % 4.3 %

Three months ended June 30, 2025 compared to June 30, 2024.

The deferred compensation plan increased G&A expenses by $1.5 million for the three months ended June 30, 2025, and increased G&A expenses by $0.3 million during the same period in 2024.

The G&A expenses, excluding the impact of the deferred compensation plan, would have been $26.2 million, or 3.8% of revenue, for the three months ended June 30, 2025, compared to $21.7 million, or 5.2% of revenue, for the same period in 2024, an increase of approximately $4.5 million.

The increase was primarily driven by $1.4 million higher facility costs, $0.9 million higher insurance costs, $0.8 million higher marketing costs, $0.7 million higher professional services costs, $0.6 million higher technology costs, and $0.1 million higher other discretionary spending to support business growth.

The G&A expenses for the three months ended June 30, 2025 included approximately $8.1 million of integration costs primarily associated with the Transaction.

For the three months ended June 30, 2024 there were approximately $0.1 million non-recurring transaction and integration costs associated with acquisitions.

Six Months Ended June 30, 2025 compared to June 30, 2024.

The deferred compensation plan increased G&A expenses by $1.3 million for the six months ended June 30, 2025, and increased G&A expenses by $1.4 million during the same period in 2024.

G&A expenses, excluding the impact of the deferred compensation plan, would have been $54.4 million, or 3.6% of revenue, for the six months ended June 30, 2025, compared to $39.4 million,

or 4.3% of revenue, for the same period in 2024, an increase of $15.0 million.

The increase in G&A expenses was primarily due to approximately $5.7 million higher professional service costs, $1.8 million higher insurance costs, $1.7 million higher personnel costs, $1.5 million higher marketing costs, $1.5 million higher facility costs, $1.5 million higher other discretionary costs to support business growth, $1.0 million higher technology costs, and $0.3 higher office expenses.

The G&A expenses for the six months ended June 30, 2025 included approximately $14.8 million of integration costs primarily associated with the Transaction.

For the six months ended June 30, 2024 there were approximately $1.5 million non-recurring transaction and integration costs associated with acquisitions.

Other Income (Expense), Net

(1,966) 9,424 (11,390) (120.9) %

Three Months Ended June 30,

(Amounts in thousands, except percentages)

Interest expense $ (27,867) $ (5,884) $ (21,983) N/M

Other income, net (1)

25,374 2,483 22,891 N/M

Total other income (expense), net $ (2,493) $ (3,401) $ 908 (26.7) %

(1) Other income (expense), net includes a net loss of $(2.6) million during the three months ended March 31, 2025, and a net gain of $9.6 million for the same period in 2024, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

(1) Other income, net includes a net gain of $13.2 million during the three months ended June 30, 2025, and a net gain of $2.6 million for the same period in 2024, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

The adjustments to the investments held in a rabbi trust related to the deferred compensation plan are offset by a corresponding increase or decrease to compensation expense, which is recorded as “Operating expenses” and “G&A expenses.” The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share.

In addition, included in Other income, net for the three months ended March 31, 2025 and 2024, is expense of $0.5 million and $0.4 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

In addition, included in Other income, net for the three months ended June 30, 2025 and 2024, is expense of $1.0 million and $0.2 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

As stated in Note 6.

Commitments and Contingencies, in the three months ended June 30, 2025 the Company recorded a gain of $12.5 million from a legal settlement within Other Income, net.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Interest expense $ (53,023) $ (10,395) $ (42,628) N/M

Other income, net (2)

23,408 11,907 11,501 96.6 %

Total other income (expense), net $ (29,615) $ 1,512 $ (31,127) N/M

(2) Other income, net includes a net gain of $10.6 million during the six months ended June 30, 2025, compared to a net gain of $12.2 million for the same period in 2024, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which were recorded in "Corporate and Other" for segment reporting purposes.

The adjustments to the investments held in a rabbi trust related to the deferred compensation plan are offset by a corresponding increase or decrease to compensation expense, which is recorded as “Operating expenses” and “G&A expenses.” The deferred compensation plan has no impact on “Income from continuing operations before income tax expense” or diluted earnings per share.

In addition, included in Other income, net for the six months ended June 30, 2025 and 2024, is expense of $1.5 million and $0.6 million, respectively, related to net changes in the fair value of contingent consideration related to prior acquisitions.

As stated in Note 6.

Commitments and Contingencies, in the six months ended June 30, 2025 the Company recorded a gain of $12.5 million from a legal settlement within Other income, net.

Interest Expense

Three months ended March 31, 2025 compared with March 31, 2024.

During the three months ended March 31, 2025, our average debt balance and weighted average effective interest rate were $1,443.4 million and 6.57%, respectively, compared to $325.6 million and 5.23%, respectively, for the same period of 2024.

The increase in interest expense for the three months ended March 31, 2025 as compared to the same period in 2024 was primarily driven by higher average debt balance associated with the 2024 Credit Facilities which was entered into on November 1, 2024.

Three and six months ended June 30, 2025 compared with June 30, 2024.

During the three months ended June 30, 2025, our average debt balance and weighted average effective interest rate were $1,542.4 million and 6.75%, respectively, compared to $410.1 million and 4.85%, respectively, for the same period in 2024.

The increase in interest expense for the three months ended June 30, 2025 as compared to the same period in 2024 was

primarily driven by the higher average debt balance associated with the 2024 Credit Facilities which was entered into on November 1, 2024.

During the six months ended June 30, 2025, our average debt balance and interest rate was $1,493.2 million and 6.67% compared to $367.9 million and 5.41% for the same period in 2024.

The increase in interest expense for the six months ended June 30, 2025 as compared to the same period in 2024 was primarily driven by the higher average debt balance as well as higher weighted average effective interest rate.

Our indebtedness is further discussed in Note 5, Debt and Financing Arrangements, to the accompanying unaudited condensed consolidated financial statements.

Other Income (Expense), Net

Three months ended March 31, 2025 compared with March 31, 2024.

For the three months ended March 31, 2025, other income (expense), net includes a net loss of $(2.6) million associated with the deferred compensation plan.

For the same period in 2024, other income (expense), net includes a net gain of $9.6 million associated with the deferred compensation plan.

Excluding the impact of the deferred compensation plan from other income (expense), net would result in an increase of $0.8 million for the three months ended March 31, 2025 compared to the same period in 2024.

The increase was primarily due to higher expense related to contingent consideration fair value adjustments of $0.2 million, a $0.3 million gain on the sale of assets, and higher other expenses of $0.3 million.

Further discussion related to the fair value contingent consideration adjustment is included in Note 8, Fair Value Measurements, to the accompanying unaudited condensed financial statements.

Three and six months ended June 30, 2025 compared with June 30, 2024.

For the three months ended June 30, 2025, other income, net includes a net gain of $13.2 million associated with the deferred compensation plan.

For the same period in 2024, other income, net includes a net gain of $2.6 million associated with the deferred compensation plan.

Excluding the impact of the deferred compensation plan from other income, net would result in a decrease of $9.7 million for the three months ended June 30, 2025 compared to the same period in 2024.

The decrease was primarily due to $22.0 million higher interest expense offset by a gain from a legal settlement of $12.5 million recorded to other income, net.

For the six months ended June 30, 2025, other income, net includes a net gain of $10.6 million associated with the non-qualified deferred compensation plan.

For the same period in 2024, other income, net includes a net gain of $12.2 million associated with the non-qualified deferred compensation plan.

Excluding the impact of the deferred compensation plan from other income, net would result in a decrease of $29.5 million for the six months ended June 30, 2025 compared to the same period in 2024.

The decrease was primarily due to $42.6 million higher interest expense offset by a gain from a legal settlement of $12.5 million recorded to other income, net and $0.7 million interest income.

Further discussion related to the legal settlement is included in Note 6, Commitments and Contingencies, to the accompanying unaudited condensed financial statements.

Income Tax Expense

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Effective tax rate 27.4 % 29.8 %

Three months ended March 31, 2025 compared with March 31, 2024.

The effective tax rate for the three months ended March 31, 2025 was 29.0%, compared to an effective tax rate of 26.1% for the comparable period in 2024.

The increase in the effective tax rate for the three month period ended March 31, 2025 was primarily due to a lower tax benefit recognized related to stock-based compensation expense during the first quarter of 2025 compared to the same period in 2024, which adversely affected the effective tax rate as related to pre-tax income.

The increase in income tax expense in the first three months of 2025 compared to the same period in the prior year was primarily driven by the increase in pre-tax income in 2025.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Income tax expense $ 65,974 $ 35,530 $ 30,444 85.7 %

Effective tax rate 28.6 % 26.9 %

Three and six months ended June 30, 2025 compared with June 30, 2024.

The effective tax rate for the three months ended June 30, 2025 was 27.4%, compared to an effective tax rate of 29.8% for the comparable period in 2024.

The decrease in the effective tax rate for the three month period ended June 30, 2025 was primarily due to the tax effect of lower non-deductible expenses and lower state income tax expenses compared to the same period in 2024.

These items favorably affected the tax rate as related to pre-tax income for the three months ended June 30, 2025 when compared to the same period in 2024.

The increase in income tax expense for the three months ended June 30, 2025 when compared to the same period in 2024 was primarily driven by the increase in pre-tax income in 2025.

The effective tax rate for the six months ended June 30, 2025 was 28.6%, compared to an effective tax rate of 26.9% for the same period in 2024.

The increase in the effective tax rate for the six month period ended June 30, 2025 was primarily due to lower tax benefits related to stock-based compensation expense that was recognized in 2025 as compared to the same period in 2024.

This item adversely affected the effective tax rate as related to pre-tax income for the six months ended June 30, 2025 when compared to the same period in 2024.

The increase in income tax expense for the six months ended June 30, 2025 when compared to the same period in 2024 was primarily driven by the increase in pre-tax income in 2025.

Operating Practice Groups

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Financial Services

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Gross margin percent 15.0 % 15.0 %

Three months ended March 31, 2025 compared to March 31, 2024

The Financial Services practice group revenue for the three months ended March 31, 2025 grew by 91.5% to $713.7 million from $372.6 million during the same period in 2024.

This increase is primarily driven by those units that provide traditional accounting and tax-related services, which increased $315.6 million as a result of the acquistion, the units that provide national technology services, which increased $12.9 million all attributed to the acquisition, the units that provide advisory services, which increased by $8.6 million, and the units that provide government healthcare compliance business consulting, which increased by approximately $3.9 million.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Revenue $ 1,283,480 $ 681,863 $ 601,617 88.2 %

Operating expenses 994,951 528,370 466,581 88.3 %

Gross margin / Operating income 288,529 153,493 135,036 88.0 %

Total other income, net 159 214 (55) (25.7) %

Income before income tax expense $ 288,688 $ 153,707 $ 134,981 87.8 %

Gross margin percent 22.5 % 22.5 %

Three months ended June 30, 2025 compared to June 30, 2024

The Financial Services practice group revenue for the three months ended June 30, 2025 grew by 84.3% to $569.8 million from $309.2 million during the same period in 2024.

This increase of $260.6 million is primarily driven by those units that provide traditional accounting and tax-related services, which increased $196.6 million primarily as a result of the Transaction, the units that provide advisory services, which increased by $48.1 million, the units that provide national technology services, which increased $15.8 million, and the units that provide government healthcare compliance business consulting, which increased by approximately $0.2 million.

We provide a range of services to affiliated CPA firms under joint referral and administrative service agreements (“ASAs”).

Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $234.3 million and $87.8 million for the three months ended March 31, 2025 and 2024, respectively.

Fees earned under the ASAs are recorded as revenue in the accompanying Condensed Consolidated Statements of Comprehensive Income and were approximately $164.6 million and $68.9 million for the three months ended June 30, 2025 and 2024, respectively.

Operating Expenses

Operating expenses for the three months ended March 31, 2025 increased by $244.9 million, or 92.2%, as compared to the same period last year.

Operating expenses for the three months ended June 30, 2025 increased by $221.6 million, or 84.3%, as compared to the same period in 2024.

Personnel costs increased by $165.3 million, of which acquisitions contributed approximately $163.5 million to the increase.

Compared to the same period in 2024, depreciation and amortization costs, direct costs, facility costs, technology costs, marketing costs, and professional services costs increased by approximately $15.7 million, $12.6 million, and $11.4 million, $5.4 million, $2.0 million, and $1.1 million, respectively.

Compared to the same period in 2024, depreciation and amortization

costs, direct costs, facility costs, technology costs, professional service costs, travel and entertainment costs, and marketing costs increased by approximately $15.9 million, $13.2 million, $12.1 million, $6.1 million, $3.4 million, $2.9 million and $1.6 million, respectively.

Additionally, there was $1.1 million higher other discretionary spending to support business growth.

Operating expenses as a percentage of revenue increased slightly to 71.5% for the three months ended March 31, 2025 from 71.3% of revenue for the prior year quarter.

Operating expenses as a percentage of revenue stayed the same at 85.0% for the three months ended June 30, 2025 and 2024.

Six months ended June 30, 2025 compared to June 30, 2024.

Revenue for the six months ended June 30, 2025 grew by 88.2% to $1,283.5 million from $681.9 million during the same period in 2024.

This increase of $601.6 million was primarily driven by those units that provide traditional accounting and tax-related services, which increased $512.1 million primarily as a result of the Transaction, the units that provide advisory services, which increased by $56.7 million, the units that provide national technology services, which increased $28.6 million, and the units that provide government healthcare compliance business consulting, which increased by approximately $4.2 million.

Fees earned under the ASAs, as described above, were approximatel y $398.9 million and $156.8 million f or the six months ended June 30, 2025 and 2024, respectively.

Operating Expenses

Operating expenses for the six months ended June 30, 2025 increased by $466.6 million, or 88.3%, as compared to the same period last year.

Personnel costs increased by $360.0 million, primarily do to the Transaction.

Compared to the same period in 2024, depreciation and amortization costs, direct costs, facility costs, technology costs, professional services costs, marketing costs, travel and entertainment costs, and office expenses increased by approximately $31.6 million, $25.8 million, $23.5 million, $11.5 million, $4.6 million, $3.6 million, $3.2 million, and $1.5 million, respectively.

In addition,other discretionary costs increased by approximately $1.4 million to support the business growth.

Operating expense as a percentage of revenue stayed the same at 77.5% during the six months ended June 30, 2025 and 2024.

Benefits and Insurance Services

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Gross margin percent 17.6 % 14.6 %

Three months ended March 31, 2025 compared to March 31, 2024

The Benefits and Insurance Services practice group revenue increased by $4.6 million, or 4.2%, to $113.0 million during the three months ended March 31, 2025 compared to $108.4 million for the same period in 2024.

The increase is primarily driven by a $5.5 million increase in payroll-related services and a $3.1 million increase in the employee benefit and retirement benefit services lines.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Revenue $ 214,905 $ 205,827 $ 9,078 4.4 %

Operating expenses 169,365 166,880 2,485 1.5 %

Gross margin / Operating income 45,540 38,947 6,593 16.9 %

Total other income, net 373 87 286 N/M

Income before income tax expense $ 45,913 $ 39,034 $ 6,879 17.6 %

Gross margin percent 21.2 % 18.9 %

Three months ended June 30, 2025 compared to June 30, 2024

The Benefits and Insurance Services practice group revenue increased by $4.5 million, or 4.6%, to $101.9 million during the three months ended June 30, 2025 compared to $97.4 million for the same period in 2024.

is primarily driven by a $3.6 million increase in employee benefit and retirement benefit services lines and a $2.5 million increase in payroll-related services.

The increase was offset by a $1.6 million decrease in the property and casualty services revenue.

Operating Expenses

Operating expenses for the three months ended March 31, 2025 increased by $1.7 million, or 2.1%, when compared to the same period last year.

Personnel costs increased by $0.9 million, of which acquisitions contributed $1.6 million, offset by lower compensation related costs.

Compared to the same period in 2024, direct cost increased by approximate ly $1.4 million .

The increase was offset with a decrease of approximately $0.7 million in other discretionary spending to support business growth.

Operating expenses as a percentage of revenue decreased to 75.6% for the quarter ended March 31, 2025 from 77.2% of revenue for the same period in 2024, primarily due to increase in revenue generated from the employee benefit and retirement benefit services.

Operating expenses for the three months ended June 30, 2025 increased by $0.8 million, or 0.9%, when compared to the same period in 2024.

Direct costs increased by $1.5 million compared to the same period in 2024.

The increase was offset with a decrease of approximately $0.4 million in personnel costs and $0.4 million in other discretionary spending to support business growth.

Operating expenses as a percentage of revenue decreased to 82.4% for the quarter ended June 30, 2025 from 85.4% of revenue for the same period in 2024, primarily due to increase in revenue generated from the employee benefit and retirement benefit services.

Six months ended June 30, 2025 compared to June 30, 2024.

The Benefits and Insurance Services practice group revenue increased by $9.1 million, or 4.4%, to $214.9 million during the six months ended June 30, 2025 compared to $205.8 million for the same period in 2024.

The increase is primarily driven by a $8.0 million increase from payroll-related services and a $6.7 million increase in employee benefit and retirement benefit services lines.

The increase was offset by a $5.6 million decrease in the property and casualty services revenue.

Operating Expenses

Operating expenses for the six months ended June 30, 2025 increased by $2.5 million, or 1.5%, when compared to the same period in 2024.

Direct costs increased by $2.9 million compared to the same period in 2024.

This increase was offset by a decrease of $0.4 million in discretionary spending to support business growth.

Operating expense as a percentage of revenue decreased to 78.8% during the six months ended June 30, 2025 as compared to 81.1% of revenue for the same period in 2024.

National Practices

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Gross margin / Operating income 1,267 1,332 (65) (4.9) %

Total other (expense) income, net — (4) 4 N/M

Income before income tax expenses $ 1,267 $ 1,328 $ (61) (4.6) %

Gross margin percent 10.8 % 10.0 %

Three months ended March 31, 2025 compared with March 31, 2024

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Revenue $ 23,125 $ 26,619 $ (3,494) (13.1) %

Operating expenses 20,746 23,961 (3,215) (13.4) %

Gross margin / Operating income 2,379 2,658 (279) (10.5) %

Total other (expense) income, net — (4) 4 (100.0) %

Income before income tax expenses $ 2,379 $ 2,654 $ (275) (10.4) %

Gross margin percent 10.3 % 10.0 %

Three and six months ended June 30, 2025 compared with June 30, 2024

Revenue and Operating Expenses

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Revenues from this single client accounted for approximately 75% of the National Practice group’s revenue.

During the three months ended March 31, 2025, revenue decreased by $1.9 million, or 14.2% due to the divestiture in the same period in 2024.

The operating expenses decreased by $1.7 million or 14.0%, primarily driven by lower personnel costs due to the impact of divestiture.

During the three and six months ended June 30, 2025, revenue decreased by $1.6 million, or 12.1%, and by $3.5 million, or 13.1%, respectively, while operating expenses decreased by $1.5 million or 12.9%,and $3.2 million, or 13.4%, respectively.

Corporate and Other

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These expenses primarily consist of certain health care costs, gains or losses attributable to assets held in our deferred compensation plan, stock-based compensation, consolidation and integration charges, certain professional fees, certain advertising costs, and other various expenses.

Three Months Ended March 31,

Three Months Ended June 30,

(Amounts in thousands, except percentages)

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Loss before income tax expense $ (46,792) $ (33,906) $ (12,886) 38.0 %

Three months ended March 31, 2025 compared to March 31, 2024

Total operating expenses increased by $11.6 million during the three months ended March 31, 2025, as compared to the same period in 2024.

The deferred compensation plan increased operating expenses by $2.4 million for the three months ended March 31, 2025 and increased operating expenses by $8.6 million during the same period in 2024.

Excluding the deferred compensation expenses, operating expenses decreased by $0.5 million during the three months ended March 31, 2025, as compared to the same period in 2024.

Six Months Ended June 30,

(Amounts in thousands, except percentages)

Operating expenses 20,437 $ 23,642 $ (3,205) (13.6) %

Corporate general and administrative expenses 55,707 40,761 14,946 36.7 %

Operating loss (76,144) (64,403) (11,741) 18.2 %

Total other (expense) income, net (30,149) 1,215 (31,364) N/M

Loss before income tax expense $ (106,293) $ (63,188) $ (43,105) 68.2 %

Three months ended June 30, 2025 compared to June 30, 2024

Total operating expenses increased by $8.4 million during the three months ended June 30, 2025, as compared to the same period in 2024.

The deferred compensation plan increased operating expenses by $11.7 million for the three months ended June 30, 2025 and increased operating expenses by $2.3 million during the same period in 2024.

Excluding the deferred compensation expenses, operating expenses decreased by $1.1 million during the three months ended June 30, 2025, as compared to the same period in 2024.

The decrease was primarily driven by lower personnel costs.

Total corporate general and administrative expenses increased by $9.4 million, or 50.0%, during the three months ended March 31, 2025, as compared to the same period in 2024.

The deferred compensation plan decreased corporate general and administrative expenses by $0.1 million for the three months ended March 31, 2025 and increased corporate general and administrative expenses by $1.1 million during the same period in 2024.

Excluding the deferred compensation expenses, corporate general and administrative expense increased by approximately $10.5 million during the three months ended March 31, 2025, as compared to the same period in 2024.

The G&A expenses for the three months ended March 31, 2025 included approximately $7.7 million integration costs primarily associated with the Transaction.

For the three months ended March 31, 2024, there were approximately $0.5 million non-recurring transaction and integration costs associated with acquisitions.

Total other (expense) income, net increased by $32.4 million during the three months ended March 31, 2025, as compared to the same period in 2024.

For the three months ended March 31, 2025, total other (expense) income, net includes a net loss of $2.6 million associated with the deferred compensation plan.

For the same period in 2024, total other expense, net includes a net gain of $9.6 million associated with the deferred compensation plan.

Excluding the impact of the deferred compensation plan, total other income (expense), net decreased by $20.2 million, primarily due to higher interest expense of $20.6 million, partially offset by a decrease of $0.3 million in interest income.

Total corporate general and administrative expenses increased by $5.6 million, or 25.3%, during the three months ended June 30, 2025, as compared to the same period in 2024.

The deferred compensation plan decreased corporate general and administrative expenses by $1.5 million for the three months ended June 30, 2025 and increased corporate general and administrative expenses by $0.3 million during the same period in 2024.

Excluding the deferred compensation expenses, corporate general and administrative expense increased by approximately $4.5 million during the three months ended June 30, 2025, as compared to the same period in 2024.

The increase was primarily driven by $1.4 million higher facility costs, $0.9 million higher insurance costs, $0.8 million higher

marketing costs, $0.7 million higher professional services costs, $0.6 million higher technology costs, and $0.1 million higher other discretionary spending to support business growth.

The corporate general and administrative expenses for the three months ended June 30, 2025 included approximately $8.1 million of integration costs primarily associated with the Transaction.

For the three months ended June 30, 2024 there were approximately $0.1 million non-recurring transaction and integration costs associated with acquisitions.

Total other income (expense), net increased by $1.1 million during the three months ended June 30, 2025, as compared to the same period in 2024.

For the three months ended June 30, 2025, total other income (expense), net includes a net gain of $13.2 million associated with the deferred compensation plan.

For the same period in 2024, total other income (expense), net includes a net gain of $2.6 million associated with the deferred compensation plan.

Excluding the impact of the deferred compensation plan, total other income (expense), net decreased by $9.7 million for the three months ended June 30, 2025 compared to the same period in 2024.

The decrease was primarily due to $22.0 million higher interest expense offset by a gain from a legal settlement of $12.5 million recorded to other income (expense), net.

Six months ended June 30, 2025 compared to June 30, 2024

Total operating expenses decreased by $3.2 million ,or 13.6%, during the six months ended June 30, 2025, as compared to the same period in 2024.

The deferred compensation plan decreased operating expenses by $9.3 million for the six months ended June 30, 2025, and increased operating expense by $10.9 million during the same period in 2024.

Excluding the deferred compensation expenses, operating expense decreased by approximately $1.6 million during the six months ended June 30, 2025, as compared to the same period in 2024, primarily driven by lower personnel costs.

Total corporate general and administrative expenses increased by $14.9 million, or 36.7%, during the six months ended June 30, 2025, as compared to the same period in 2024.

The deferred compensation plan increased corporate general and administrative expenses by $1.3 million for the six months ended June 30, 2025 and by $1.4 million during the same period in 2024.

Excluding the deferred compensation expenses, corporate general and administrative expense increased by approximately $15.0 million during the six months ended June 30, 2025, as compared to the same period in 2024.

The increase in corporate general and administrative expenses was primarily due to approximately $5.7 million higher professional service costs, $1.8 million higher insurance costs, $1.7 million higher personnel costs, $1.5 million higher marketing costs, $1.5 million higher facility costs, $1.5 million higher other discretionary costs to support business growth, $1.0 million higher technology costs, and $0.3 higher office expenses.

The corporate general and administrative expenses for the six months ended June 30, 2025 included approximately $14.8 million of integration costs primarily associated with the Transaction.

For the six months ended June 30, 2024 there were approximately $1.5 million non-recurring transaction and integration costs associated with acquisitions.

Total other (expense) income, net increased by $31.4 million during the six months ended June 30, 2025, as compared to the same period in 2024.

Total other (expense) income, net for the six months ended June 30, 2025 includes a net gain of $10.6 million associated with the deferred compensation plan.

For the same period in 2024, total other income (expense), net includes a net gain of $12.2 million associated with the deferred compensation plan.

Excluding the impact of the deferred compensation plan, total other income (expense), net decreased by $29.5 million for the six months ended June 30, 2025 compared to the same period in 2024.

The decrease was primarily due to $42.6 million higher interest expense, partially offset by a gain from a legal settlement of $12.5 million recorded to other income (expense), net and $0.7 million interest income.

Our principal sources of liquidity are cash generated from operating activities and financing activities.

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Upon completion of the seasonal accounting and tax services period, cash provided by operations during the remaining three quarters of the fiscal year substantially exceeds the use of cash in the first quarter of the fiscal year.

Accounts receivable balances increase in response to the first three months' revenue generated by the Financial Services practice group.

Accounts receivable balances increase in response to the first six months' revenue generated by the Financial Services practice group.

A significant amount of this revenue is billed and collected in subsequent quarters.

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We provide DSO data because such data is commonly used as a performance measure by analysts and investors and as a measure of our ability to collect on receivables in a timely manner.

Trailing-twelve-month DSO, including the impact of acquisitions, was 96 days and 101 days at March 31, 2025 and 2024, respectively.

Trailing-twelve-month DSO, including the impact of acquisitions, was 87 days and 95 days at June 30, 2025 and 2024, respectively.

DSO at December 31, 2024 was 73 days.

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For additional details, refer to the accompanying Condensed Consolidated Statements of Cash Flows.

Three Months Ended March 31,

Six Months Ended June 30,

(Amounts in thousands)

Net cash used in operating activities $ (88,266) $ (63,720)

Net cash provided by operating activities $ 24,880 $ 24,439

Net cash used in investing activities (12,299) (33,247)

Net cash provided by financing activities 55,363 71,188

Net cash used in financing activities (33,249) (11,920)

Net decrease in cash, cash equivalents and restricted cash $ (20,668) $ (20,728)

Operating Activities - Cash used in operating activities was $88.3 million during the three months ended March 31, 2025, primarily consisted of working capital use of $247.7 million, which was offset by net income of $122.8 million and certain non-cash items, such as depreciation and amortization expense of $24.8 million, deferred income tax of $4.3 million, stock-based compensation expense of $5.6 million, and an adjustment to contingent earnout liability of $0.5 million.

Cash used in operating activities was $63.7 million during the three months ended March 31, 2024, primarily consisted of working capital use of $155.9 million, which was offset by net income of $76.9 million and certain non-cash items, such as depreciation and amortization expense of $9.5 million, deferred income tax of $2.1 million, and stock-based compensation expense of $2.6 million.

Investing Activities - Cash used in investing activities during the three months ended March 31, 2025 was $5.0 million and consisted primarily of $5.2 million in capital expenditures, and $0.1 million in other investing activities primarily related to acquisition related working capital adjustment payments and notes receivable.

Operating Activities - Cash provided by operating activities was $24.9 million during the six months ended June 30, 2025, primarily consisted of working capital use of $225.1 million, which was offset by net income of $164.7 million and certain non-cash items, such as depreciation and amortization expense of $49.9 million, deferred income tax of $17.1 million, stock-based compensation expense of $12.2 million, and an adjustment to contingent earnout liability of $1.5 million.

Cash provided by operating activities was $24.4 million during the six months ended June 30, 2024, and primarily consisted of working capital use of $101.5 million, which was offset by net income of $96.7 million and certain non-cash items, such as depreciation and amortization expense of $19.0 million, deferred income tax of $3.1 million, and stock-based compensation expense of $5.0 million.

Investing Activities - Cash used in investing activities during the six months ended June 30, 2025 was $12.3 million and consisted primarily of $13.1 million in capital expenditures, and $0.5 million in other investing activities primarily related to acquisition related working capital adjustment payments and notes receivable.

The net cash flow related to funds held for clients and other activities were immaterial.

Cash used in investing activities during the three months ended March 31, 2024 was $28.7 million and consisted primarily of $21.3 million used for business acquisitions, $5.1 million in capital expenditures, and $2.2 million in other investing activities primarily related to acquisition related working capital adjustment payments and notes receivable.

Cash used in investing activities during the six months ended June 30, 2024 was $33.2 million and consisted primarily of $22.5 million used for business acquisitions, $7.0 million in capital expenditures, and $3.8 million in other investing activities primarily related to acquisition related working capital adjustment payments and notes receivable.

The net cash flow related to funds held for clients and other activities were immaterial.

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The nature of these accounts is further described in Note 1, Basis of Presentation and Significant Accounting Policies, to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Financing Activities - Cash provided by financing activities during the three months ended March 31, 2025 was $55.4 million and primarily consisted of $127.5 million in net proceeds from the credit facility, partially offset by $7.6 million of cash used in share repurchases for tax withholding purposes, a $35.1 million net decrease in client fund obligations and $29.5 million in contingent consideration payments related to prior acquisitions.

Cash provided by

financing activities during the three months ended March 31, 2024 was $71.2 million and primarily consisted of $125.4 million in net proceeds from the credit facility, partially offset by $11.2 million of cash used in share repurchases for tax withholding purposes, a $11.9 million net decrease in client fund obligations and $31.1 million in contingent consideration payments related to prior acquisitions.

Financing Activities - Cash used in financing activities during the six months ended June 30, 2025 was $33.2 million and primarily consisted of $79.1 million of cash used in share repurchases, of which $71.3 million was under the ROFR Agreement, a $57.2 million net decrease in client fund obligations and $48.8 million in contingent consideration payments related to prior acquisitions, which was partially offset by $152.8 million in net proceeds from the credit facility.

Cash used in financing activities during the six months ended June 30, 2024 was $11.9 million and primarily consisted of $68.6 million in net proceeds from the credit facility, partially offset by $11.2 million of cash used in share repurchases for tax withholding purposes, a $28.3 million net decrease in client fund obligations and $41.0 million in contingent consideration payments related to prior acquisitions.

CAPITAL RESOURCES

Credit Facility - At March 31, 2025, we had $1,548.4 million outstanding under the 2024 Credit Facilities as well as $3.2 million of outstanding letters of credit.

Available funds under the 2024 Credit Facilities, based on the terms of the commitment, were approximately $384.0 million at March 31, 2025.

The weighted average interest rate under the 2024 Credit Facilities was 6.57% during the three months ended March 31, 2025, compared to 5.23% for the same period in 2024.

The 2024 Credit Facilities allow for the allocation of funds for future strategic initiatives, including acquisitions and the repurchase of our common stock, subject to the terms and conditions of the 2024 Credit Facilities.

Credit Facility - At June 30, 2025, we had $1,573.7 million outstanding under the 2024 Credit Facilities as well as $3.2 million of outstanding letters of credit.

Available funds under the 2024 Credit Facilities, based on the terms of the commitment, were approximately $370.0 million at June 30, 2025.

The weighted average interest rate under the 2024 Credit Facilities was 6.67% during the six months ended June 30, 2025, compared to 5.41% for the same period in 2024.

The 2024 Credit Facilities allows for the allocation of funds for future strategic initiatives, including

acquisitions and the repurchase of our common stock, subject to the terms and conditions of the 2024 Credit Facilities.

Debt Covenant Compliance - Under the 2024 Credit Facilities, we are required to meet certain financial covenants with respect to (i) total leverage ratio and (ii) minimum interest charge coverage ratio.

We are in compliance with our financial covenants as of March 31, 2025.

We were in compliance with our financial covenants as of June 30, 2025.

Our ability to service our debt and to fund future strategic initiatives will depend upon our ability to generate cash in the future.

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Use of Capital - Our overall business objective continues to focus on making strategic acquisitions that allow us to strengthen our presence in existing markets, expand into high growth industries, and broaden our services to our existing offerings.

As a result of the Transaction and related 2024 Credit Facilities we have $1,548.4 million of outstanding debt as of March 31, 2025.

As a result of the Transaction and related 2024 Credit Facilities we have $1,573.7 million of outstanding debt as of June 30, 2025.

During the three months ended March 31, 2025 we completed no acquisitions.

During the three months ended March 31, 2025, we also repurchased 0.1 million shares of our common stock for tax withholding purposes at a total cost of approximately $7.7 million.

Cash Requirements - Cash requirements for the remainder of 2025 and beyond will include the repayment of outstanding debt and related interest, making strategic acquisitions, funding seasonal working capital requirements, making contingent purchase price payments for previous acquisitions, share repurchases, income tax payments, and capital expenditures.

During the six months ended June 30, 2025 we completed no acquisitions.

During the six months ended June 30, 2025, we repurchased 1.0 million shares of our common stock at a cost of $71.3 million under the ROFR Agreement.

Cash Requirements - Cash requirements for the remainder of 2025 and beyond will include share repurchases through our ROFR agreement, the repayment of outstanding debt and related interest, making strategic acquisitions, funding seasonal working capital requirements, making contingent purchase price payments for previous acquisitions, income tax payments, and capital expenditures.

We believe that cash provided by operations, as well as available funds under our 2024 Credit Facilities will be sufficient to meet cash requirements for the remainder of 2025 and beyond.

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The accompanying unaudited condensed consolidated financial statements do not reflect the operations or accounts of variable interest entities as the impact is not material to the financial condition, results of operations, or cash flows of CBIZ.

We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled $3.2 million and $3.2 million at March 31, 2025 and December 31, 2024, respectively.

We provide letters of credit to landlords (lessors) of our leased premises in lieu of cash security deposits, which totaled $3.2 million and $3.2 million at June 30, 2025 and December 31, 2024, respectively.

In addition, we provide license bonds to various state agencies to meet certain licensing requirements.

The amount of license bonds outstanding was $2.2 million and $2.2 million at March 31, 2025 and December 31, 2024, respectively.

The amount of license bonds outstanding was $2.2 million and $2.2 million at June 30, 2025 and December 31, 2024, respectively.

We have various agreements under which we may be obligated to indemnify the other party with respect to certain matters.

Generally, these indemnification clauses are included in contracts arising in the normal course of business under which we customarily agree to hold the other party harmless against losses arising from a breach of representations, warranties, covenants or agreements, related to matters such as title to assets sold and certain tax

Payment by us under such indemnification clauses is generally conditioned upon the other party making a claim.

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Historically, we have not made any payments under these agreements that have been material individually or in the aggregate.

As of March 31, 2025, we are not aware of any material obligations arising under indemnification agreements that would require payment.

As of June 30, 2025, we are not aware of any material obligations arising under indemnification agreements that would require payment.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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our goodwill and other intangible assets could become impaired, which could lead to material non-cash charges against earnings and a material impact on our results of operations and financial condition;

certain liabilities resulting from acquisitions are estimated and could lead to a material impact on our

results of operations;

certain liabilities resulting from acquisitions are estimated and could lead to a material impact on our results of operations;

we may fail to realize the anticipated benefits of acquisitions, or they may prove disruptive and could result in the combined business failing to meet our expectations;

recent Securities & Exchange Commission ("SEC") and Public Company Accounting Oversight Board ("PCAOB") sanctions against Marcum may adversely impact our performance and reputation;

recent SEC and Public Company Accounting Oversight Board ("PCAOB") sanctions against Marcum may adversely impact our performance and reputation;

if we are unable to implement and maintain effective internal control over financial reporting following the Transaction, we may fail to prevent or detect material misstatements in our financial statements, in which case investors could lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decline;

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governmental regulations and interpretations are subject to changes, which could have a material adverse effect on our financial condition;

changes in the United States healthcare environment, including new healthcare legislation, may adversely affect the revenue and margins in our healthcare benefit business;

changes in the United States healthcare environment, including

new healthcare legislation, may adversely affect the revenue and margins in our healthcare benefit business;

we are subject to risks relating to processing customer transactions for our payroll and other transaction processing businesses;

9 unchanged sentences

we require a significant amount of cash for interest payments on our debt and to expand our business as planned;

terms of our amended and restated credit agreement the 2024 Credit Facilities could adversely affect our ability to run our business and/or reduce stockholder returns;

terms of the 2024 Credit Facilities could adversely affect our ability to run our business and/or reduce stockholder returns;

our failure to satisfy covenants in our debt instruments could cause a default under those instruments;

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis