Financial services provider CBIZ (NYSE:CBZ) fell short of the markets revenue expectations in Q3 CY2025, but sales rose 58.1% year on year to $693.8 million. On the other hand, the company’s full-year revenue guidance of $2.88 billion at the midpoint came in 2.6% above analysts’ estimates. Its non-GAAP profit of $1.01 per share was 12.6% above analysts’ consensus estimates.
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CBIZ (CBZ) Q3 CY2025 Highlights:
- Revenue: $693.8 million vs analyst estimates of $709.2 million (58.1% year-on-year growth, 2.2% miss)
- Adjusted EPS: $1.01 vs analyst estimates of $0.90 (12.6% beat)
- Adjusted EBITDA: $120 million vs analyst estimates of $115 million (17.3% margin, 4.4% beat)
- The company reconfirmed its revenue guidance for the full year of $2.88 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $3.63 at the midpoint
- EBITDA guidance for the full year is $453 million at the midpoint, in line with analyst expectations
- Operating Margin: 8.5%, down from 11.5% in the same quarter last year
- Market Capitalization: $2.72 billion
StockStory’s Take
CBIZ’s third quarter was shaped by the ongoing integration of the Marcum acquisition, which management described as a source of both scale and operational improvement. While the company’s revenue came in below Wall Street’s expectations, the non-GAAP profit outpaced consensus, reflecting margin gains from cost discipline and synergy realization. CEO Jerry Grisko emphasized steady organic growth in core accounting and tax services, as well as better demand in project-based advisory work. Management credited investments in technology, AI, and expanded industry groups for supporting client retention and new business wins.
Looking forward, CBIZ’s outlook is anchored by its broadened service offerings, operational excellence initiatives, and anticipated synergy gains from the Marcum integration. Management reiterated its guidance for the year, highlighting the importance of continued efficiency efforts, including increased offshoring and technology upgrades. CFO Brad Lakhia noted, "our operational initiatives around staff utilization and technology will be key to margin sustainability as we move into 2026." The company expects further benefits from real estate consolidation and process standardization as integration activities progress.
Key Insights from Management’s Remarks
Management cited the Marcum acquisition, operational efficiency, and resilient core service demand as primary drivers influencing the quarter’s results and guidance.
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Marcum integration on track: The company reported that the Marcum integration is ahead of schedule in most key areas, with standardized processes, shared resource centers, and leadership blending driving operational improvements. Management highlighted the launch of 12 industry groups and expanded offshoring as factors supporting both revenue growth and cost efficiencies.
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Core accounting and tax resilience: Organic growth in core accounting and tax services remained steady, helping offset softness in more cyclical areas. Management noted the recurring nature of these services, which comprise about 72% of the business, supports stable performance regardless of macroeconomic swings.
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Advisory business rebound: Project-based advisory and M&A-related services saw improved demand relative to the first half, benefiting from more favorable market conditions. CEO Grisko pointed to increased client activity and successful large client wins, particularly within industry groups such as food and energy.
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Pricing power maintained: The company achieved mid-single-digit rate increases in the quarter, outpacing inflation and exceeding some industry peers. Management signaled that there are no structural barriers to sustaining this level of pricing, which bolsters profitability.
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Benefits and Insurance softness: The Benefits and Insurance segment experienced lighter demand, largely due to a soft property and casualty market and reduced discretionary project work. Management attributed this trend to broader industry headwinds affecting insurance brokerage revenues.
Drivers of Future Performance
CBIZ’s management expects continued integration benefits, pricing gains, and operational efficiencies to drive its outlook, while monitoring insurance market headwinds and discretionary demand.
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Synergy realization and efficiency: Management expects most of the $50 million synergy target from the Marcum integration to be realized by next year, with further upside possible from real estate consolidation and staff co-location. These efforts, along with increased offshoring and investments in AI-driven solutions, are projected to enhance both margins and client experience.
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Sustained pricing and core growth: The company anticipates maintaining mid-single-digit pricing increases in core accounting and tax services, supporting revenue growth even amid a cautious macro environment. Management believes the recurring nature of these services will remain a stabilizing factor for overall performance.
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Market and segment risk factors: Management identified headwinds in the Benefits and Insurance segment, including ongoing softness in property and casualty markets and some government consulting delays due to federal funding. Additionally, the company is monitoring the potential impact of integration-related severance costs and the timing of synergy capture on near-term margins.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be watching (1) the pace and magnitude of synergy realization from Marcum integration activities, (2) sustained pricing power and organic growth in core accounting and tax services, and (3) stabilization or improvement in the Benefits and Insurance segment. Execution on real estate consolidation and further technology adoption will also be important drivers of performance.
CBIZ currently trades at $51.20, in line with $51.35 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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