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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-28 · 108 added, 125 removed, 229 unchanged (50% of the section changed)

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This Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to, and should be read in conjunction with, our consolidated financial statements included elsewhere in this report.

In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management’s expectations.

In addition to historical information, this discussion and analysis contain forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management’s expectations.

Please see the sections of this report entitled “Forward-Looking Statements” and “Risk Factors.” This section generally discusses the results of operations for fiscal year 2025 compared to fiscal year 2024.

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Financial Year in Review - Revenue of $2,758.0 million in 2025 grew $944.5 million, or 52.1%, from revenue of $1,813.5 million in 2024.

Same-unit revenue, as defined below in the "Results of Operations" section, increased by $76.9 million, or 4.8%, while acquisitions, net of divestitures, contributed $145.4 million to revenue, or 8.0%.

A detailed discussion of revenue by practice group is included under “Operating Practice Groups.” Net income in 2024 decreased $80.0 million, or 66.1%, to $41.0 million from $121.0 million in 2023.

Revenue from newly acquired operations, net of divestitures, contributed $914.2 million, or 50.4%, of incremental revenue for the year ended December 31, 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 in 2025 increased $74.4 million, or 181.3%, to $115.4 million from $41.0 million in 2024.

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

Earnings per diluted share was $1.83 in 2025, compared to $0.78 in 2024, with a fully diluted weighted average share count of 63.2 million shares in 2025, compared to 52.7 million shares in 2024.

Strategic 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.

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 year ended December 31, 2024, we completed the following five acquisitions:

• Effective February 1, 2024, we acquired all of the assets of Erickson, Brown & Kloster LLC ("EBK").

EBK, based in Colorado Springs, Colorado, is a provider of a full range of accounting, tax, and financial advisory services to clients in a wide array of industries.

Operating results for EBK are reported in the Financial Services practice group.

• Effective March 1, 2024, we acquired all of the assets of CompuData, Inc ("CompuData").

CompuData, based in Philadelphia, Pennsylvania, is a provider of technology services and solutions, such as Cloud Hosting, ERP Solutions, IT Security and Managed IT Services.

Operating results for CompuData are reported in the Financial Services practice group.

• Effective June 1, 2024, we acquired all of the assets of Educational & Institutional Insurance Administrators, Inc ("EIIA").

EIIA, based in Chicago, Illinois, is a provider of private higher education specific insurance and risk management programs and services.

Operating results for EIIA are reported in the Benefits and Insurance Services practice group.

• Effective October 1, 2024, we acquired all of the assets of Hoover Financial Advisors, Inc ("Hoover Financial Advisors").

Hoover Financial Advisors, based in Indianapolis, Indiana, is a provider of financial planning advice for individuals, families, and small businesses.

Operating results for Hoover Financial are reported in the Benefits and Insurance Services practice group.

• Effective November 1, 2024, we acquired Marcum LLP ("Marcum").

Marcum, based in New York, New York, is a national accounting and advisory service firm.

Marcum offers a wide range of accounting, tax, and advisory services serving both privately held and publicly registered companies.

Operating results for Marcum's core accounting and technology services are reported in the Financial Service practice group.

The operating results for Marcum Search and Marcum Staffing are reported within the Benefits and Insurance Services practice group.

Refer to Note 2, Business Combinations, to the accompanying consolidated financial statements for further discussion on acquisitions.

Strategic Use of Capital - Our overall business objective is funding organic growth acceleration and meeting working capital needs.

This includes investments in client service delivery and emerging technology that support revenue growth and improve operational excellence.

Following the completion of the Transaction, our second priority is to pay down debt to be within a net leverage ratio range of 2.0x and 2.5x overtime.

As a result of the Transaction and related 2024 Credit Facilities, we have $1,472.4 million of outstanding debt under the 2024 Credit Facilities as of December 31, 2025.

In addition, we believe that repurchasing shares of our common stock can be 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.

We will also remain focused 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 clients.

On February 11, 2026, 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.

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

Pursuant to previously authorized share repurchase programs, we repurchased 1.3 million shares of our common stock in the open market at a total cost of approximately $65.1 million in 2023.

We did not repurchase any shares of our common stock in the open market in 2024.

Under the Share Repurchase Program, we repurchased 1.5 million shares of our common stock for a total cost of $109.1 million under the ROFR Agreement and 0.9 million shares of our common stock in the open market during the year ended December 31, 2025 for a total cost of $50.9 million.

We repurchased no shares on the open market during the year ended December 31, 2024.

Shares repurchased to settle statutory employee withholding related to vesting of stock awards were 0.1 million shares at a cost of $7.8 million during the year ended December 31, 2025 and 0.2 million shares at a cost of $11.5 million during the year ended December 31, 2024.

Refer to Note 14, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program.

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Financial Services, Benefits and Insurance Services and National Practices.

A description of these groups’ operating results and factors affecting their businesses is provided below.

Same-unit revenue, also known internally as "Organic revenue", represents total revenue adjusted to reflect comparable periods of activity for acquisitions and divestitures.

For example, for a business acquired on July 1, 2023, revenue for the period January 1, 2024 through June 30, 2024 would be reported as revenue from acquired businesses whereas revenue for the periods from July 1 through December 31 of both years would be reported as same-unit revenue.

Divested operations represent operations that did not meet the criteria for treatment as discontinued operations.

A description of these groups’ operating results and factors affecting their businesses is provided below under "Operating Practice Groups."

The following table summarizes total revenue for the years ended December 31, 2025 and 2024:

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

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

Non-qualified Deferred Compensation Plan - We sponsor a non-qualified deferred compensation plan ("NQDCP"), under which select CBIZ employees 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 are included in “Operating expenses,” “Gross margin” and “Corporate General & Administrative expenses” and are directly offset by deferred compensation gains or losses in “Other income (expense), net” in the accompanying Consolidated Statements of Comprehensive Income.

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Our operating expenses increased by $771.6 million.

Operating expense as a percentage of revenue increased to 89.9% of revenue in 2024 as compared to 86.0% of revenue for the prior year.

Operating expense as a percentage of revenue decreased to 87.1% of revenue in 2025 as compared to 89.9% of revenue for the prior year.

The non-qualified deferred compensation plan increased operating expenses by $20.3 million in 2025 and by $18.8 million in 2024.

Excluding the impact of the non-qualified deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses would have been $2,382.3 million, or 86.4% of revenue, in 2025 as compared to $1,612.2 million, or 88.9% of revenue, in 2024.

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

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) share-based compensation.

Excluding the impact of non-qualified deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, operating expenses increased by approximately $770.1 million in 2025, as compared to 2024.

Operating expenses for the year ended December 31, 2024 included approximately $5.0 million costs related to the Transaction, and operating expenses for the year ended December 31, 2023 included approximately $1.9 million non-recurring integration and retention costs related to the acquisition of Somerset CPAs and Advisors ("Somerset").

The increase in operating costs was driven by $194.5 million higher personnel cost (of which the Transaction contributed approximately $128.6 million), $14.1 million higher direct costs, $11.3 million higher depreciation and amortization costs, $10.9 million higher facility costs, $10.7 million higher technology costs, $10.2 million higher travel and entertainment costs, $7.6 million higher professional fees, and $2.2 million higher bad debt expense.The increases were offset by a $0.1 million decrease in other discretionary spending.

Operating expenses for the year ended December 31, 2025, included approximately $64.3 million costs related to the Transaction for integration, and operating expenses for the year ended December 31, 2024, included approximately $5.0 million in costs related to the Transaction.

The increase in operating expenses was driven by $581.3 million higher personnel cost, $50.4 million higher depreciation and amortization costs, $46.9 million higher facility costs, $35.8 million higher direct costs, $20.3 million higher technology costs, $16.4 million higher professional fees, $9.6 million higher travel and entertainment costs, $5.1 million higher marketing costs, $3.5 million higher bad debt expense, and $0.8 million increase in other discretionary spending.

Personnel costs and other operating expenses are discussed in further detail under “Operating Practice Groups.”

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G&A expenses excluding deferred compensation % of revenue 4.3 % 5.9 %

Our G&A expenses increased by approximately $50.8 million, or 87.6%, in 2024 as compared to 2023, and increased to 6.0% of revenue from 3.6% of revenue for the prior year.

Our G&A expenses increased by approximately $12.6 million, or 11.6%, in 2025, as compared to 2024, and decreased to 4.4% of revenue from 6.0% of revenue for the prior year.

The non-qualified deferred compensation plan increased G&A expenses by $3.0 million in 2025, and by $2.4 million in 2024.

Excluding the impact of the deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes, G&A expenses would have been $118.4 million, or 4.3% of revenue, in 2025, as compared to $106.4 million, or 5.9% of revenue, in 2024, an increase of $12.0 million in 2025 as compared to prior year.

The increase was primarily driven by $38.5 million higher professional service fees associated with the Transaction, a $2.9 million higher legal reserve, $2.5 million higher personnel costs, $ 1.5 million higher insurance costs and $1.1 million higher marketing expenses.

The increase was primarily driven by $6.6 million higher personnel costs, $6.2 million higher marketing expenses, $2.4 million higher technology costs, $2.3 million higher insurance costs and $1.6 million higher facility costs.

Other discretionary spending increased by approximately $1.2 million to support the growth in business activities.

G&A expenses for the year ended December 31, 2024 included a $43.7 million costs related to the Transaction.

G&A expenses for the year ended December 31, 2023 included a $1.9 million non-recurring transaction and integration costs related to the Somerset acquisition.

These increases were partially offset by an $8.3 million decrease in professional service fees.

G&A expenses for the year ended December 31, 2025 and 2024 included $24.8 million and $43.7 million, respectively, of costs related to the Transaction.

Other Income (Expense), net

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33,329 13,538

Total other income (expense), net $ (15,909) $ 1,064

Total other expense, net $ (73,175) $ (15,909)

(1) Other income, net includes a net gain of $23.3 million in 2025 and a net gain of $21.1 million in 2024, associated with the value of investments held in a rabbi trust related to the deferred compensation plan, which was recorded in "Corporate and Other" for segment reporting purposes.

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

Interest Expense - On November 1, 2024 we entered into the 2024 Credit Facilities.

Interest expense was $34.4 million in 2024, compared to $20.1 million in 2023.

Interest Expense - Interest expense was $107.2 million in 2025, compared to $34.4 million in 2024.

Our blended average debt balance and blended weighted average interest rate was $1,517.9 million and 6.56%, respectively, in 2025, as compared to $538.6 million and 6.00%, respectively, in 2024.

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Our debt is further discussed in Note 10, Debt and Financing Arrangements, to the accompanying consolidated financial statements.

Gain on Sale of Operations, net - During the twelve months ended December 31, 2024, we recorded approximately $4.9 million gain related to a sold business in the National Practice Group.

During the same period in 2023, we recorded approximately $0.2 million additional gain related to a previously sold business as additional contingent proceeds were received.

Gain on Sale of Operations, net - During the twelve months ended December 31, 2025, we recorded approximately $1.1 million gain related to the Transaction and a $1.1 million additional gain related to a previously sold business in the National Practice Group.

These gains were offset with $1.5 million in adjustments.

During the same period in 2024, we recorded approximately $4.9 million additional gain related to a sold business in the National Practice Group.

Other Income (Expense), net - The majority of “Other income (expense), net” consists of net gains and losses associated with the value of the non-qualified deferred compensation plan as discussed above, net adjustments to the fair value of our contingent purchase price liability related to prior acquisitions, as well as gains or losses related to the sale of assets.

Other income of $33.3 million in 2025 included a $23.3 million net gain related to the deferred compensation plan.

Excluding the impact of the deferred compensation plan the Other Income (Expense), net balance for the year ended December 31, 2024 would be an expense of $7.6 million primarily related to the $7.0 million expense increase to the fair value of the contingent purchase price liability.

Other income of $21.0 million in 2023 consisted of a net gain of $19.5 million related to the deferred compensation plan, $2.8 million gain related to the sale of certain assets, $0.7 million interest income from non-operating investments, as well as $0.7 million miscellaneous income, offset by $2.7 million expense due to the net increase to the fair value of the contingent purchase price liability.

Excluding the impact of the deferred compensation plan the Other Income (Expense), net balance for the year ended December 31, 2025, would be income of $10.0 million.

Other income of $13.5 million in 2024 consisted of a net gain of $21.1 million related to the deferred compensation plan.

Excluding the impact of the deferred compensation plan, the Other Income (Expense), net balance for the year ended December 31, 2024, would be an expense of $7.6 million.

Excluding the impact of the deferred compensation plan from other income (expense), net, would result in an increase of $17.6 million for the year ended December 31, 2025, compared to the same period in 2024.

The increase was primarily due to a $12.5 million legal settlement gain, $4.6 million higher contingent earnout adjustment, $3.0 million higher other miscellaneous income, net, and $1.7 million higher interest income.

In addition, we recorded a loss of approximately $4.3 million primarily due to early lease terminations, which did not occur in 2024.

As a result, the expenses associated with the loss on assets decreased by $4.2 million in 2025 as compared to 2024.

Income Tax Expense

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Effective tax rate 28.2 % 29.0 %

The decrease in income tax expense from 2023 to 2024 was primarily driven by the reduction in pre-tax income from 2023 to 2024.

The increase in the effective tax rate from 2023 to 2024 was primarily due to the disallowance of meals and entertainment expense having a greater unfavorable impact against a lower pre-tax income in 2024.

The increase in income tax expense from 2024 to 2025 was primarily driven by the increase in pre-tax income from 2024 to 2025.

The decrease in the effective tax rate from 2024 to 2025 was primarily due to the disallowance expenses having a lesser unfavorable impact against a higher pre-tax income in 2025.

Operating Practice Groups

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(Amounts in thousands, except percentages)

Same-unit $ 1,216,364 $ 1,160,686 $ 55,678 4.8 %

Acquired businesses 146,175 — 146,175

Total revenue 1,362,539 1,160,686 201,853 17.4 %

Revenue $ 2,301,462 $ 1,362,539 $ 938,923 68.9 %

Operating expenses 1,964,869 1,213,621 751,248 61.9 %

Gross margin / Operating income $ 336,593 $ 148,918 $ 187,675 126.0 %

Total other income, net 622 2,218 (1,596) (72.0) %

Total other income (loss), net (1,979) 622 (2,601) (418.2) %

Income before income tax expense $ 334,614 $ 149,540 $ 185,074 123.8 %

Gross margin percentage 14.6 % 10.9 %

The Financial Services practice group revenue in 2024 grew by 17.4% to $1,362.5 million from $1,160.7 million in 2023.

Same-unit revenue grew by $55.7 million, or 4.8%, across all service lines, primarily driven by a $24.5 million increase from those units that provide traditional accounting and tax-related services, a $19.2 million increase in government healthcare compliance business, and a $11.9 million increase from those units that provide project-oriented advisory services.

The impact of the acquired businesses, net of divestitures, contributed $146.2 million, or 10.7%, of 2024 revenue.

The Financial Services practice group revenue increased by 68.9% to $2,301.5 million in 2025 from $1,362.5 million in 2024.

This increase of $938.9 million was primarily the result of the Transaction and was across all service lines.

When compared to the same period in 2024, revenue from traditional accounting and tax-related services increased by $796.9 million, revenue from advisory services increased by $94.0 million, revenue from national technology services increased by $46.1 million, and revenue from government healthcare consulting services increased $1.9 million.

We provide a range of services to affiliated CPA firms under ASAs.

Fees earned under the ASAs are recorded as revenue in the accompanying Consolidated Statements of Comprehensive Income and were $651.2 million and $306.5 million in 2025 and 2024, respectively.

Operating expenses increased by $238.5 million in 2024 as compared to 2023, primarily as a result of $178.9 million, or 22.5%, in higher personnel costs, of which acquisitions contributed approximately $141.4 million to the increase primarily driven by the Transaction in 2024.

Compared to the same period in 2023, direct costs, depreciation and amortization expense, facility costs, technology costs, travel and entertainment costs, professional service costs, and allocations increased by $15.8 million, $11.6 million, $10.7 million, $7.9 million, $7.1 million, $5.9 million, and $1.6 million, respectively, as well as $1.0 million lower other discretionary costs to support business growth.

Operating expense as a percentage of revenue increased to 89.1% in 2024 from 84.0% in 2023.

Operating expenses increased by $751.2 million in 2025, as compared to 2024, primarily as a result of $578.3 million higher personnel costs primarily driven by the Transaction in 2025.

Compared to the same period in 2024, depreciation and amortization expense, direct costs, facility costs, technology costs, professional service costs, marketing costs, bad debt expense, and employee costs to support business growth increased by $51.7 million, $40.7 million, $40.1 million, $18.4 million, $10.8 million, $5.5 million, $2.8 million and $2.8 million, respectively.

Operating expense as a percentage of revenue decreased to 85.4% in 2025 from 89.1% in 2024.

Benefits and Insurance Services

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(Amounts in thousands, except percentages)

Same-unit $ 397,865 $ 382,605 $ 15,260 4.0 %

Acquired businesses 3,183 — 3,183

Total revenue 401,048 382,605 18,443 4.8 %

Revenue $ 409,633 $ 401,048 $ 8,585 2.1 %

Operating expenses 334,696 328,272 6,424 2.0 %

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The Benefits and Insurance Services practice group revenue in 2025 grew by 2.1% to $409.6 million from $401.0 million in 2024.

Same-unit revenue increased by $15.3 million, or 4.0%, in 2024 when compared to the same period in 2023.

The increase primarily driven by a $16.3 million increase in employee benefit and retirement benefit services lines, as well as a $0.7 million increase in other project-based services, partially offset by a decrease of $1.8 million in property and casualty services.

Operating expenses increased by $17.8 million in 2024 as compared to 2023, primarily driven by $14.8 million, or 6.1%, higher personnel costs, attributable primarily to the amount of annual merit increases, bonus accruals, and investment in new sales producers.

Compared to 2023, technology costs, direct costs, and professional service costs, increased by $1.4 million, $0.8 million, and $0.7 million, respectively.

In addition, other miscellaneous discretionary costs increased by approximately $0.1 million, primarily driven by higher employee costs to support business growth.

Operating expense as a percentage of revenue remained relatively unchanged at 81.9% in 2024 as compared 81.2% in 2023.

The increase primarily driven by a $11.2 million increase in employee benefit and retirement benefit services lines, as well as a $6.1 million increase from payroll and human capital related services, partially offset by a decrease of $8.7 million in property and casualty services.

Operating expenses increased by $6.4 million in 2025 as compared to 2024.

This increase was primarily driven by direct costs and personnel costs which increased by $5.6 million and $1.7 million, respectively, when compared to the same period in 2024.

This increase was partially offset by a decrease of $1.3 million of depreciation and amortization expenses and a decrease of $0.4 million in other miscellaneous discretionary costs.

Operating expense as a percentage of revenue remained relatively unchanged at 81.7% in 2025, as compared to 81.9% in 2024.

National Practices

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(Amounts in thousands, except percentages)

Same-unit $ 49,885 $ 43,966 $ 5,919 13.5 %

Divested operation — 3,937 (3,937) N/M

Total revenue 49,885 47,903 1,982 4.1 %

Revenue $ 46,896 $ 49,885 $ (2,989) (6.0) %

Operating expenses 42,033 44,625 (2,592) (5.8) %

Gross margin / Operating income $ 4,863 $ 5,260 $ (397) (7.5) %

Total other income, net 4,929 1 4,928 N/M

Total other income, net 1,125 4,929 (3,804) (77.2) %

Income before income tax expenses $ 5,988 $ 10,189 $ (4,201) (41.2) %

Gross margin percentage 10.4 % 10.5 %

Revenue growth in this practice group was primarily driven by our cost-plus contract with a single client, which has existed since 1999.

The cost-plus contract is a five-year contract with the most recent renewal through

December 31, 2028.

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

Operating expenses have increased mainly due to increases in salary and benefits costs.

During the year ended December 31, 2024, we completed the sale of CBIZ KA Consulting Services, LLC ("KA Consulting"), which was a component of the National Practices group.

For the year ended December 31, 2024, KA Consulting contributed approximately $8.4 million of revenue.

The remaining National Practice Group is primarily driven by our cost-plus contract with a single client, which has existed since 1999.

The cost-plus contract is a five-year contract with the most recent renewal through December 31, 2028.

The decrease in revenue and in operating expense was attributed to the result of the sale of KA Consulting.

Corporate and Other

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The non-qualified deferred compensation plan increased operating expenses by $20.3 million in 2025 and by $18.8 million in 2024.

Excluding the non-qualified deferred compensation expenses, operating expense increased by approximately $3.6 million, primarily driven by $5.6 million higher personnel costs, offset by $1.1 million lower marketing expenses and $0.9 million lower other miscellaneous discretionary costs.

Total G&A expenses increased by approximately $50.8 million, or 87.6%, in 2024 as compared to 2023.

Excluding the non-qualified deferred compensation expenses, operating expense increased by approximately $15.0 million, primarily driven by $5.9 million higher professional service fees, $5.3 million higher facility costs, $2.6 million higher personnel costs, and $1.2 million higher other discretionary spending to support business growth.

Total G&A expenses increased by approximately $12.6 million, or 11.6%, for the year ended December 31, 2025 as compared to 2024.

The non-qualified deferred compensation plan increased G&A expenses by $3.0 million in 2025 and by $2.4 million in 2024.

Excluding the impact of the deferred compensation plan, G&A expenses increased by $50.7 million in 2024 as compared to prior year.

Excluding the impact of the deferred compensation plan, G&A expenses would have increased by $12.0 million in 2025 as compared to prior year.

Other discretionary spending increased by approximately $1.2 million to support the growth in business activities.

In addition, G&A expenses for the year ended December 31, 2024 included $43.7 million costs related to the Transaction.

G&A expenses for the year ended December 31, 2023 included $1.9 million non-recurring transaction and integration costs related to the Somerset acquisition.

These increases were offset by an $8.3 million decrease in professional service fees.

G&A expenses for the year ended December 31, 2025 and 2024 included $24.8 million and $43.7 million, respectively, of costs related to the Transaction.

Total other expense, net increased by $51.8 million to $73.5 million from $21.6 million in 2024.

Total other expense, net includes a net gain of $21.1 million and a net gain of $19.5 million associated with the non-qualified deferred compensation plan in 2024 and 2023, respectively.

Total other expense, net includes net gains of $23.3 million and $21.1 million associated with the non-qualified deferred compensation plan in 2025 and 2024, respectively.

Excluding the impact of the non-qualified deferred compensation plan, total other expense, net would have been $96.8 million in 2025 and $42.8 million in 2024, a net increase in expense of approximately $54.0 million.

The increase was driven by $14.2 million higher interest expense due to the borrowing under the 2024 Credit Facilities to finance the Transaction, as well as higher blended weighted average effective interest rate experienced in 2024 as compared to 2023, $4.4 million higher contingent earnout expense associated with prior acquisitions, and $2.5 million higher other miscellaneous expenses.

LIQUIDITY AND CAPITAL RESOURCES

The increase was primarily due to $72.8 million higher interest expense, partially offset by a gain from a legal settlement of $12.5 million recorded to other income (expense), net, $4.6 million higher fair value adjustments, an increase of $1.7 million of interest income, and $0.1 million higher other adjustments.

The following table is derived from our Consolidated Statements of Cash Flows (in thousands):

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Net cash provided by (used in) financing activities (145,712) 1,035,613

We generate strong cash flows from operations and have access to $556.0 million under the 2024 Credit Facility, which enables us to fund investment and operating projects that are designed to optimize stockholder return.

flows from operations and available capital resources allow us to make strategic acquisitions, repurchase shares of our common stock when accretive to stockholders, meet working capital needs, and service our debt.

We generate strong cash flows from operations and have access to $415.5 million under the 2024 Credit Facilities, which enables us to fund investment and operating projects that are designed to optimize stockholder return.

Cash flows from operations and available capital resources allow us to make strategic acquisitions, repurchase shares of our common stock when accretive to stockholders, meet working capital needs, and service our debt.

Generally, we maintain low levels of cash and apply any available cash to pay down our outstanding debt balance.

Due to the seasonal nature of the Financial Services practice group’s accounting and tax services in the first four months of the fiscal year, we historically generate much of our cash flows during the last three quarters of the fiscal year.

Our working capital management primarily relates to trade accounts receivable, accounts payable, incentive-based compensation and other assets, which consists of other receivables and prepaid assets typically related to activities in the normal course of our business operations.

At any specific point in time, working capital is subject to many variables, including seasonality and the timing of cash receipts and payments, most notably in the timing of insurance premiums to the carriers within our Benefits and Insurance Services practice group.

Due to the seasonal nature of the Financial Services practice group’s accounting and tax services, which are concentrated in the first four months of the fiscal year, we historically generate a significant portion of our cash flows during the last three quarters of the fiscal year.

Our working capital management primarily relates to trade accounts receivable, accounts payable, incentive-based compensation and other assets, which consist of other receivables and prepaid assets typically related to activities in the normal course of our business operations.

At any specific point in time, working capital is subject to many

variables, including seasonality and the timing of cash receipts and payments, most notably in the timing of insurance premiums to the carriers within our Benefits and Insurance Services practice group.

We have restricted cash on deposit from clients in connection with the pass-through of insurance premiums to the carrier with the related liability for these funds recorded in “Accounts payable” in the accompanying Consolidated Balance Sheets.

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Cash Provided by Operating Activities

2024 compared to 2023 - Cash provided by operating activities was $123.7 million during 2024, consisting of net income of $41.0 million and certain non-cash items, such as depreciation and amortization expense of $48.1 million, share-based compensation expense of $13.8 million, bad debt expense of $3.8 million, adjustment to the fair value of contingent purchase consideration of $7.0 million, and $23.4 million use of cash from working capital management offset by deferred income tax of $8.6 million and $4.93 million gain on sale of operations, net of tax.

Cash provided by operating activities was $153.5 million during 2023, consisting of net income of $121.0 million and certain non-cash items, such as depreciation and amortization expense of $36.3 million, share-based compensation expense of $12.3 million, deferred income tax of $11.3 million, bad debt expense of $1.6 million, adjustment to the fair value of contingent purchase consideration of $2.7 million, offset by $29.0 million of cash generated from working capital management.

Cash provided by operating activities was $192.5 million during 2025, consisting of net income of $115.4 million and certain non-cash items, such as depreciation and amortization expense of $98.3 million, share-based compensation expense of $26.0 million, amortization expense of deferred financing fees of $5.5 million, bad debt expense of $7.3 million, deferred income tax of $4.6 million, and an adjustment to the fair value of contingent purchase consideration of $2.6 million, and other expense of $5.1 million, primarily consisting of a non-cash write-off of lease incentive receivables associated with terminated facility leases.

These were offset by $71.6 million of use of cash from working capital management and a $0.7 million loss on sale of operations, net of tax.

Cash provided by operating activities was $123.7 million during 2024, consisting of net income of $41.0 million and certain non-cash items, such as depreciation and amortization expense of $48.1 million, share-based compensation expense of $13.8 million, bad debt expense of $3.8 million, adjustment to the fair value of contingent purchase consideration of $7.0 million, and $23.4 million use of cash from working capital management offset by deferred income tax of $8.6 million and a $4.9 million gain on sale of operations, net of tax.

Cash Used in Investing Activities

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Refer to Note 1, Basis of Presentation and Significant Accounting Policies, and Note 2, Business Combinations, to the accompanying consolidated financial statements for further discussion on our acquisitions and a further description of funds held for clients and client fund obligations.

2024 - Net cash used in investing activities in 2024 consisted primarily of $1,087.5 million cash paid for the Transaction and other 2024 business acquisitions, $12.9 million in capital expenditures, $1.3 million net purchases of client fund investments, and $34.7 million payments primarily related to the a $22.1 million notes to CBIZ CPAs, and other working capital adjustments related payments, partially offset by $7.1 million proceeds received from the sale of certain assets.

2023 - Net cash used in investing activities in 2023 consisted of $53.1 million related to business acquisitions, $23.1 million in capital expenditures, and $10.3 million payments of working capital adjustments related to previously completed acquisitions, partially offset by $4.3 million proceeds received from the sale of client funds investment and $3.0 million proceeds received from sale of certain assets.

2025 - Net cash used in investing activities in 2025 consisted primarily of $17.0 million cash paid for capital expenditures, $4.0 million net purchases and change of client fund investments, and $1.6 million cash paid for a business acquisition.

These investing cash outflows were offset with $5.2 million payments primarily related to collections to notes receivable and $1.5 million cash received related to prior year divestiture.

2024 - Net cash used in investing activities in 2024 consisted primarily of $1,087.5 million cash paid for the Transaction and other 2024 business acquisitions, $12.9 million in capital expenditures, $1.3 million net purchases of client fund investments, and $34.7 million payments primarily related to the $22.1 million notes to CBIZ CPAs, and other working capital related payments, partially offset by $7.1 million proceeds received from the sale of certain assets.

Cash Provided by and Used in Financing Activities

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Refer to Note 10, Debt and Financing Arrangements, and Note 14, Common Stock, to the accompanying consolidated financial statements for further discussion on our 2024 Credit Facilities and Share Repurchase Program.

2024 - Net cash provided by financing activities in 2024 consisted of $1,108.5 million net proceeds from our 2024 Credit Facilities and a net increase of $16.0 million in client fund obligations, offset by $11.5 million used to repurchase share for tax withholding purposes, $56.8 million of contingent consideration payments for prior acquisitions, and $20.7 million deferred financing fees paid in connection with the 2024 Credit Facilities

2023 - Net cash used in financing activities in 2023 consisted of $73.8 million of share repurchases, $45.2 million of contingent consideration payments for prior acquisitions, and a net decrease of $13.6 million in client fund obligations, partially offset by $8.8 million in proceeds from the exercise of stock options and $46.7 million net proceeds and borrowings under our prior credit facility.

2025 - Net cash provided by financing activities in 2025 consisted of $51.5 million net proceeds from our 2024 Credit Facilities and a net increase of $30.8 million in client fund obligations, partially offset by $160.1 million used to repurchase shares, $7.8 million used to repurchase shares for tax withholding purposes, $58.7 million of contingent consideration payments for prior acquisitions, $1.0 million deferred financing fees paid in connection with the 2024 Credit Facilities, and $0.5 million used for payments of notes payable.

2024 - Net cash provided by financing activities in 2024 consisted of $1,108.5 million net proceeds from our 2024 Credit Facilities and a net increase of $16.0 million in client fund obligations, offset by $11.5 million used to repurchase shares for tax withholding purposes, $56.8 million of contingent consideration payments for prior acquisitions, and $20.7 million deferred financing fees paid in connection with the 2024 Credit Facilities.

CAPITAL RESOURCES

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Total capital $ 3,234,467 $ 3,200,883

Credit Facility - Our primary financing arrangement is the $2.0 billion unsecured credit facility, by and among CBIZ Operations, Inc., CBIZ, Inc.

and Bank of America, N.A., as administrative agent and bank, and other participating banks, which provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases, and matures in 2029.

Credit Facility - Our primary financing arrangement is the $2,000.0 million secured credit facility, which is that certain Amended and Restated Credit Agreement, by and among CBIZ Operations, Inc., as the Borrower, the Company, the several banks, financial institutions, institutional lenders and other investors from time to time party thereto as the Lenders, and Bank of America, N.A., as Agent, as Issuing Bank and as Swing Line Bank (as amended by that certain First Amendment, dated as of March 7, 2025 and as further amended by that certain Second Amendment, dated as of April 29, 2025), which provides us with the capital necessary to meet our working capital needs as well as the flexibility to continue with our strategic initiatives, including business acquisitions and share repurchases, and matures in 2029.

At December 31, 2025, we had $1,472.4 million outstanding under the credit facility, as well as letters of credit and license bonds totaling $5.4 million.

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For further discussion regarding the 2024 Credit Facilities, refer to Note 10, Debt and Financing Arrangements, to the accompanying consolidated financial statements.

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 as described in Note 2, Business Combinations, we have $1,420.9 million outstanding debt under the 2024 Credit Facilities as of December 31, 2024.

In addition, we also have the financing flexibility and the capacity to actively repurchase shares of our common stock.

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 year ended December 31, 2024, we completed five business acquisitions.

Refer to Note 2, Business Combinations, to the accompanying consolidated financial statements for further discussion on acquisitions.

We repurchased no shares of our common stock in the open market in 2024 and 1.3 million shares at a total cost of approximately $65.1 million in 2023.

Use of Capital - Our overall business objective is funding organic growth acceleration and meet working capital needs.

This includes investments in client service delivery and emerging technology that support revenue growth and improve operational excellence.

Following the completion of the Transaction, our second priority is to pay down debt to be within a net leverage ratio range of 2.0x and 2.5x overtime.

As a result of the Transaction and related 2024 Credit Facilities, we have $1,472.4 million of outstanding debt under the 2024 Credit Facilities as of December 31, 2025.

We will also remain focused 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 clients.

During the year ended December 31, 2025, we completed no material business acquisitions.

We repurchased no shares on the open market during the year ended December 31, 2024.

Shares repurchased to settle statutory employee withholding related to vesting of stock awards were 0.1 million shares at a cost of $7.8 million during the year ended December 31, 2025, and 0.2 million shares at a cost of $11.5 million during the year ended December 31, 2024.

Refer to Note 14, Common Stock, to the accompanying consolidated financial statements for further discussion on the Share Repurchase Program.

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.

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 2025 and beyond.

We believe that cash provided by operations, as well as available funds under the 2024 Credit Facilities will be sufficient to meet cash requirements for the next 12 months and beyond.

Refer to Note 10, Debt and Financing Arrangements, to the accompanying consolidated financial statements for further discussion of the 2024 Credit Facilities.

Cash Requirements - Cash requirements for the remainder of 2026 and beyond will include the repayment of outstanding debt and related interest, share repurchases through both our ROFR Agreement and open market purchases, 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 2026 and beyond.

OBLIGATIONS AND COMMITMENTS

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There are no credit risk-related contingent features in our interest rate swaps nor do the swaps contain provisions under which we would be required to post collateral.

As of December 31, 2024, the notional value of all of our interest rate swaps was $150.0 million, with maturity dates ranging from April, 2025 to October, 2028.

As of December 31, 2025, the notional value of all our interest rate swaps were $500.0 million, with maturity dates ranging from July 14, 2026 to July, 2030.

For further details on our interest rate swaps, refer to Note 7, Financial Instruments, to the accompanying consolidated financial statements.

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Intangible assets with definite lives, such as client lists and non-compete agreements, are amortized using the straight-line method over their estimated useful lives (generally ranging from three to fifteen years).

We review these assets for impairment whenever events or changes in circumstances indicate an asset’s carrying value may not be recoverable.

We review these assets for impairment whenever events or changes in circumstances (including declines in the price of our common stock and market capitalization, deterioration in macroeconomic conditions, and declining financial performance in comparison to projected results) indicate an asset’s carrying value may not be recoverable.

Recoverability is assessed based on a comparison of the undiscounted cash flows to the recorded value of the asset.

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A reporting unit is an operating segment of a business or one level below an operating segment.

At December 31, 2024, we had six reporting units, of which one is a new reporting unit resulting from the Transaction.

The new reporting unit was added to align the internal reporting structure with services provided by the three practice groups.

As of December 31, 2024, the amount of goodwill assigned to this reporting unit is subject to change upon the finalization of the purchase price allocation.

Refer to Note.

2, Business Combination for detailed discussion of the Transaction.

We may use either a qualitative or quantitative approach when testing a reporting unit’s goodwill for impairment.

Under the qualitative assessment, we are not required to calculate the fair value of a reporting unit unless we determine that it is more likely than not that its fair value is less than its carrying amount.

If under the quantitative assessment the fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, must be measured.

Any such impairment charge would reduce earnings and could be material.

After considering changes to assumptions used in our most recent quantitative testing for each reporting unit, including the capital market environment, economic and market conditions, industry competition and trends, our weighted average cost of capital, changes in management and key personnel, the price of our common stock, changes in our results of operations, the magnitude of the excess of fair value over the carrying amount of each reporting unit as determined in our most recent quantitative testing, and other factors, we concluded that it was more likely than not that the fair values of each of our reporting units were more than their respective carrying values and, therefore, did not perform a quantitative impairment analysis.

For further information regarding our goodwill balances, refer to Note 6, Goodwill and Other Intangible Assets, Net, to the accompanying consolidated financial statements.

During the fourth quarter of 2025, we completed certain organizational reporting changes which resulted in a realignment and re-aggregation of reporting units in both the Financial Services and Benefits and Insurance Services practice groups, which resulted in new reporting units that align the internal reporting structure with the services provided by these practice groups.

The organizational changes did not result in a change in the reportable segments, nor did they result in a change of the total number of reporting units for goodwill impairment test purposes.

As of October 31, 2025, immediately after the organizational changes, there are a total of six reporting units, of which three are within the Financial Services practice group, two are within the Benefits and Insurances practice group, and one is within the National Practice group.

overall number of reporting units did not change, the components within the reporting units were impacted by the organizational reporting changes.

As a result of the aforementioned changes in reporting units, we performed a qualitative assessment immediately before the change in reporting units.

We concluded that it was more likely than not that the fair values of each of our reporting units immediately before the change exceeded their respective carrying values and, therefore, goodwill related to those reporting units was determined to not be impaired.

The change in reporting units resulted in a triggering event.

Accordingly, we performed a quantitative assessment and comparison of the fair value of our reporting units to their respective carrying value on the annual testing date.

Based on the results of the quantitative assessment, the estimated fair values of the reporting units are in excess of their respective carrying values, therefore, there was no impairment to goodwill.

It is possible, depending upon a number of factors that are not determinable at this time or within our control, that the fair values of one or more of our reporting units could decrease in the future and result in an impairment to goodwill.

Specifically, further declines in our market capitalization may trigger the need for future impairment tests where the conclusions may differ and could result in the recognition of an impairment charge.

Additionally, any significant adverse change in our near or long-term projections or macroeconomic conditions could result in future impairment charges, which could be material.

For further information regarding our goodwill balances and the quantitative assessment performed, refer to Note 6, Goodwill and Other Intangible Assets, net, to the accompanying consolidated financial statements.

Loss Contingencies - Loss contingencies, including litigation claims, are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable.

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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-K

Item 7. Management’s Discussion and Analysis