CBIZ (CBZ) Q1 2026 Earnings Call Transcript
CBIZ (CBZ) Q1 2026 Earnings Call Transcript
Motley Fool Transcribing, The Motley FoolWed, April 29, 2026 at 11:04 PM UTC
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Date
Wednesday, April 29, 2026 at 5 p.m. ET
Call participants -
Chief Executive Officer — Jerome P. Grisko
Chief Financial Officer — Brad S. Lakhia
Chief Information and Technology Officer, President of CBIZ Technology — Peter Scavuzzo
Takeaways -
Consolidated revenue -- $849 million, representing a 1.3% increase year over year.
Organic revenue growth -- 1%, including a 200 basis-point headwind from transitory client exits and integration-related impacts.
Financial services segment revenue -- Increased 2.1%, with organic growth of 1.8%; excluding temporary headwinds, organic growth would have been approximately 4%.
Benefits and insurance revenue -- $108 million, down 4%, mainly due to difficult comps and an unexpected producer departure.
Adjusted EBITDA -- $244 million, growing by $3 million year over year, with margin up 10 basis points.
Adjusted diluted EPS -- $2.50, up from $2.33, marking a 7% increase, driven by lower share count and improved profitability.
Free cash flow -- Improved by $64 million year over year, fueled primarily by $53 million in proceeds from a final purchase price adjustment.
Share repurchases -- Approximately $63 million used to repurchase about 2 million shares through April, reducing fully diluted share count by 2.6 million year over year.
Net leverage -- Reduced to 3.4 times, down from 3.9 times at year-end 2025, primarily due to higher pro forma adjusted EBITDA and modest debt reduction.
2026 outlook -- Revenue guidance reaffirmed at $2.8 billion to $2.9 billion (2%-5% growth), with adjusted EBITDA now expected at $465 million to $475 million and adjusted EPS raised to $4.00-$4.10.
Organic producer growth in B&I -- Targeting an increase of approximately 15% in producer count during the year.
AI initiatives -- Full rollout of agentic-based AI solutions began, with initial use cases achieving 20% efficiency and potential for 40% efficiency in subsequent years.
Offshoring target -- On track to raise offshore hours from 6% to 10% in 2026, with long-term plans for more than 20% outside the U.S.
Industry vertical strategy -- Launched 12 industry verticals, enabling tailored solutions, increased client pipeline activity, and new engagement wins across multiple key areas.
Pricing expectations -- Maintaining mid-single-digit price increases, supported by value-based model without notable pricing pressure from clients or technology efficiencies.
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Risks -
Benefits and insurance segment revenue decline -- Revenue decreased by 4%, attributed to tough comps for project work, lower contingent commissions, and an "unexpected departure of a single producer and his team," which was described as "an isolated departure."
Transitory client attrition in financial services -- Temporary but "elevated" client attrition and integration-related productivity impacts reduced first-quarter organic revenue growth by approximately 200 basis points.
Busy season integration challenges -- Management cited "bumpiness in January" as teams adjusted to working together for the first time during the busy season amid new or technology.
Summary
CBIZ (NYSE:CBZ) opened 2026 in line with expectations, posting modest top-line growth and achieving key integration milestones. Management reported progressive improvement in organic growth over the quarter and reiterated confidence in delivering mid-single-digit growth rates by year-end. Significant capital continued to be returned to shareholders through share repurchases, and 2026 guidance raised adjusted EPS to $4.00-$4.10 due to a lower share count. The company accelerated its technology roadmap by deploying agentic AI solutions organization-wide and confirmed distinct productivity gains as part of this next phase. CBIZ emphasized continued investment in strategic growth priorities—including talent, industry verticals, AI adoption, cross-selling, and offshoring—while reducing net leverage and sustaining robust free cash flow.
Specific headwinds from 2025 client exits and integration activities are expected to lessen after the first half, with organic revenue growth projected to accelerate as those effects are lapped.
Cross-segment collaboration via 12 new industry verticals has already led to successful new business wins and further client penetration.
Enhanced offshoring, particularly to delivery centers in the Philippines and India, is on track to support service quality and efficiency, targeting 20% offshore hours over several years.
Management cited strong recurring revenue mix and client retention as ongoing drivers of resilient free cash flow, supporting both repurchases and debt reduction.
According to Peter Scavuzzo, the AI deployment aims to deliver "faster, more insight-driven solutions," reduce repetitive tasks, improve talent retention, and elevate client service differentiation.
Adjusted EBITDA and revenue guidance remained intact despite isolated nonrecurring revenue declines in B&I, with normalization and growth expected for the remainder of the year.
Industry glossary -
Agentic AI: Advanced artificial intelligence systems capable of proactively executing multi-step tasks and workflows without continual user intervention, often using large language models and automation tools.
Producer: In Benefits and Insurance, this refers to sales professionals responsible for generating client revenue and managing customer relationships.
Contingent commissions: Variable compensation received from insurance carriers based on achieving certain performance or growth metrics within Benefits and Insurance.
Full Conference Call Transcript
Jerome P. Grisko: Thanks, Chris. Good afternoon, everyone, and thank you for joining us. We entered 2026 with a clear plan, and our overall first quarter performance was in line with our expectations. We delivered year-over-year growth in revenue, profitability, and free cash flow while returning value to shareholders through highly accretive share repurchases. Our organic growth improved throughout the quarter and is up sequentially compared to the fourth quarter. We remain confident that we will exit the year growing at our mid-single-digit organic growth target rate and be in a position to return to our long-term growth algorithm.
As we will discuss on the call, we also advanced our strategic growth priorities and made meaningful progress on our efficiency initiatives while continuing to invest in our AI capabilities, and we believe that we are positioned to be the clear leader in the middle market. I want to thank our CBIZ, Inc. team members for their exceptional performance as we completed our first busy season as an integrated company, a significant milestone for our organization. Our teams delivered strong results for clients, coordinated effectively across the platform, and maintained solid utilization during our most critical period.
We are operating fully as one company with unified teams, aligned culture and vision, common systems, and a strengthened go-to-market approach, and our scaled operating model is beginning to work as intended. In 2025, organic revenue growth was flat as we completed a year of significant transformation and integration. As we moved into 2026, we are beginning to realize the benefits of the foundation we put in place. Combined with a more favorable market backdrop, organic revenue growth improved as we progressed through the first quarter.
Our Q1 growth in Financial Services was still impacted by headwinds related to prior client exits tied to our risk and profitability standards and residual integration-related productivity impacts that shifted some tax revenue into the back half of the year, as previously discussed and contemplated in our full year guidance. We estimate that these temporary factors reduced reported organic revenue growth by approximately 200 basis points in the first quarter. We continue to expect these impacts to abate by the second half.
With our solid start to the year, we are reaffirming our revenue, adjusted EBITDA, and free cash flow targets while increasing our adjusted EPS outlook, reflecting confidence in our underlying earnings power and the impact of our accretive share repurchase activity. Now moving to slide six. We are advancing our four strategic priorities to drive growth. These priorities will strengthen our ability to win new business, retain and expand client relationships, and enhance pricing. First, CBIZ, Inc. continues to attract, retain, and elevate top talent. We are proud to have been recently named a top workplace in the nation by USA TODAY for the sixth consecutive year and see that reflected in our strong employee retention performance across the company.
Also, we are capitalizing on the greater scale and investment opportunity of our new platform by bringing in high-caliber talent to CBIZ, Inc. Within Financial Services, our level hiring initiative is identifying and advancing high-impact, high-producing MDs with several new hires recently completed and a robust pipeline of senior candidates who are drawn to CBIZ, Inc. Within Benefits and Insurance, we have added a variety of net new quality producers in the quarter and expect high momentum to carry into the second quarter as we work towards our full year target of approximately 15% increase in producers. I am also pleased to have Peter on the call today.
With Peter's appointment as Chief Information and Technology Officer, and President of CBIZ Technology, we are making a deliberate convergence: one leader, one platform, one roadmap. Peter brings close to 20 years of industry experience and is widely regarded as one of the leading voices in technology and AI in our profession. Second, we recently launched our 12 industry verticals, which are an increasingly important driver of how we go to market and serve our clients. This structure was designed to lead with insights, anticipate client needs, and deliver coordinated, tailored solutions that drive stronger retention, accelerated growth, and reinforce our value-based pricing.
We are making meaningful progress implementing this strategy, including the development of new industry-focused managed services that bring together capabilities across tax, advisory, and benefits to address specific client needs. We are seeing positive results from the greater connectivity these industry verticals provide for our national experts. In Alternative Investments and Real Estate, collaboration between our national experts is enabling us to secure a variety of new engagements in areas where clients were unaware of our capabilities. As we continue to strengthen our industry practices, we are seeing increased new client pipeline activity across several key verticals, including consumer and industrial products, capital markets, alternative investments, and construction.
Finally, we are delivering a more coordinated client experience across our service offerings. With our highly recurring revenue base and strong client retention, our most immediate growth opportunity is expanding relationships with existing clients. We are already seeing good progress as we take a more systematic approach to cross-selling across services and geographies. We are systematically increasing the number of clients using multiple services, and we expect these efforts to contribute to organic growth over time. Taken together, we believe strong execution against these four priorities positions us to drive attractive levels of growth in 2026 and beyond. Now moving to slide seven.
I have asked Peter to join us today to provide you with a more detailed walkthrough of how we are advancing our AI roadmap. But first, let me briefly reiterate how we are thinking about AI and why we believe our strategic approach to AI will be a catalyst for CBIZ, Inc. breaking away from many of our competitors. Our business is built on longstanding client relationships and services, often delivered in regulated environments that require licensed professionals to take accountability for outcomes. These engagements serve as a critical third-party validation for lenders, investors, and regulators, which creates a high bar for substitution and reinforces client stickiness.
Further, our middle market clients rely on us for judgment, context, expertise, intuition, and ethics, and typically do not have the scale or capital to build and govern AI-driven solutions themselves. The combination of our trusted relationship with our clients and our continuing investment in improved tools, processes, and systems, including AI, create a defensible moat around our position with our middle market clients. We have also largely transitioned to a value-based pricing model, which positions us to benefit from AI-driven efficiencies. As we adopt AI, we expect it to enhance our ability to deliver insights, expand wallet share, and improve margins while reinforcing, not replacing, the valued role we play for our clients.
With that, I will turn it over to Peter to share more detail on what we are delivering.
Peter Scavuzzo: Thanks, Jerry. We spent the last several quarters building the foundation for how we deploy AI across the organization, and we are now entering the next phase of that work. Let me share what that will look like internally and externally, and how we see it creating shareholder value. Just last week, we began the full rollout of our latest internal capabilities company-wide, moving from primarily AI-assisted workflows to more advanced agentic-based AI solutions. We intentionally timed this rollout following busy season to ensure our teams could remain fully focused on client delivery during our most critical period.
The maturity of large language models combined with the accessibility of advanced features within AI platforms and our own internal talent and execution has brought us to an inflection point where deployment risk is manageable and the productivity and efficiency payoff is measurable. Building on our commitment for ongoing AI-driven talent development, our latest platform release further strengthens professional growth and retention. Professionals join and stay where they are empowered to do meaningful work. By significantly reducing manual, repetitive tasks, our AI initiatives are improving retention and making us a more attractive destination for the next generation of talent. We are already seeing this in our recent lateral hiring discussions.
As it relates to the technology itself, our recent advances in AI-based data extraction and structuring capabilities position us to deliver faster, more insight-driven solutions for clients across a wider range of services. For example, on the work we are performing in one of our test services, for year one our AI-based data extraction workflow is producing 20% efficiency, with our anticipation that in subsequent years this efficiency will grow to 40%. At the same time, we are also using agentic AI to support revenue growth by enhancing how we generate and pursue revenue opportunities.
We are developing AI-driven workflows to improve the speed, quality, and consistency of RFP responses, enabling us to pursue opportunities we previously could not due to resource constraints. Beyond new client wins, AI-driven insights create natural conversation starters with existing clients, for example enabling us to benchmark client performance and flag opportunities that our professionals can then act on. This is one way in which we will expand our relationship and wallet share. As these capabilities scale, we expect improved win rates, faster time to market, and more differentiated offerings that support sustained growth and long-term value creation.
Lastly, a critical part of our AI strategy also includes our partner ecosystem, which is the foundation for the tools we are putting in place. We are leveraging leading technology partners with deep expertise in our industries and combining those capabilities with our new AI platform, proprietary workflows, and our domain knowledge. All of this is packaged together to drive productivity and efficiency and provide innovative solutions to our middle market clients, which are historically underserved from a market perspective. Our approach allows us to move faster, reduce execution risk, and build a secure enterprise-grade foundation while remaining focused on what we do best—serving clients and delivering high-quality outcomes.
Over time, this model gives us a scalable and flexible platform that can continuously evolve as AI capabilities advance. While still early on, we are making strong progress, and we will continue to update you as our capabilities develop and we drive results. Jerry, back to you.
Jerome P. Grisko: Thanks, Peter, and congratulations on your new role. We believe that companies that successfully implement AI and automation will reap the benefit of significant efficiency gains, with the savings falling through to the bottom line, resulting in margin expansion. We expect that industry leaders will then take a portion of these savings and redeploy them to capture new revenue opportunities and accelerate organic revenue growth. By freeing our professionals from manual, time-intensive work, we expect a favorable mix shift toward higher-value, higher-margin advisory, project-based services; the deployment of new AI-enabled offerings, where compliance and professional judgment matter most; and improved win rates, as our scale and technology investments differentiate CBIZ, Inc. from smaller competitors.
We believe that AI will be a turning point for our industry, with several breakout firms that have the scale and ability to invest in and train professionals to use technology to better serve our clients. At the moment, we believe that we are at the forefront of investing in and using these new technologies. Overall, we believe we are building the right foundation to leverage AI in a disciplined and scalable way, and we are excited about the role it will play in creating long-term value for our clients and our business. Slide eight details how offshoring continues to be a meaningful opportunity for CBIZ, Inc.
We are on track to achieve our target of increasing offshore hours from approximately 6% in 2025 to 10% in 2026. Our partners in the Philippines and in India are delivering high-quality work, and our U.S. teams are better engaging our global teams, which gives us confidence that we can accelerate our initial investment timeline to further expand our global capabilities. Over the next several years, with the benefit of our existing offshore delivery centers, we plan to expand hours completed outside the U.S. to more than 20%. We believe achieving these levels, which are consistent with comparable companies, will drive significant growth and margin opportunities over time.
To wrap up my remarks, I want to comment on the current business climate and our outlook. As I shared last quarter, our assumptions regarding the level of project-based activity largely drive the range of our 2% to 5% organic revenue growth outlook. With that in mind, I would like to highlight a few encouraging trends we have seen since our last call. First, the market environment for advisory work has continued to be favorable, with notable wins across risk advisory, credit risk, valuation, and private equity driving strong pipeline momentum. Second, we are seeing increased activity in our capital markets group, with more clients evaluating transactions as market conditions improve.
Third, we are very pleased to have a favorable pipeline of new prospects across both Financial Services and B&I, and we expect our pipeline to continue to grow. It is our expectation that revenue growth should continue to improve each quarter as we move through the year. Finally, as Brad will discuss in more detail, we are pleased with the strong free cash flow we are generating, and we will continue to redeploy that into debt repayment and opportunistically repurchasing stock at highly accretive valuations to create value for our shareholders. Now I would like to turn the call over to Brad for our financial review. Thank you, Jerry, and hello, everyone.
Brad S. Lakhia: My comments begin on slide 10. Our first quarter results represented a solid start to the year and were in line with our overall expectations. Consolidated revenue increased 1.3% year over year to $849 million, with organic revenue growth of 1%. Adjusted EBITDA increased $3 million year over year to $244 million, and adjusted EBITDA margin increased slightly by 10 basis points. Adjusted diluted earnings per share was $2.50 compared to $2.33 in the first quarter of last year, a 7% increase reflecting the strength of our business model, synergies we are capturing through enhanced size and scale, and a lower share count. Turning to slide 11.
We remain very pleased with our free cash flow performance, which drives and supports our capital allocation priorities. Free cash flow improved $64 million year over year, primarily due to $53 million of proceeds received from the final purchase price adjustment. This improvement balanced our typical peak seasonal working capital use and enabled us to fund approximately $63 million in share repurchases through April. Net leverage decreased to approximately 3.4 times compared to approximately 3.9 times at the end of 2025. The improvement was primarily driven by growth in pro forma adjusted EBITDA along with modestly lower debt levels.
Our weighted average fully diluted share count, which includes all future shares to be issued as part of the acquisition, declined by 2.6 million shares year over year. Year-to-date through April, we have repurchased approximately 2 million shares through open market transactions and under our right-of-first-refusal program. Moving to slide 12. Please note a presentation update for this quarter. Our Financial Services segment now includes our former National Practices segment, which is now part of our technology services business. All figures presented today reflect this change and are on a comparable year-over-year basis. Turning to performance, Financial Services had a solid start to the year, with results in line with our expectations.
Revenue increased 2.1% driven by strength across core accounting, tax, and advisory, and resulted in reported organic growth of 1.8%. As Jerry noted, results continue to reflect elevated but transitory client attrition related to the integration. We estimate this reduced first-quarter Financial Services revenue by approximately 200 basis points versus last year. Excluding this impact, first-quarter organic growth would have been approximately 4%. Looking ahead, we expect organic growth to accelerate as we lap these attrition and integration-related productivity impacts in the first half and benefit from our growth initiatives in the second half. We remain encouraged by year-to-date new wins and a strong pipeline.
In addition, favorable market demand for our advisory businesses continues with clear visibility 60 to 90 days out. On pricing, we continue to expect mid-single-digit rate increases, which are embedded in our planning assumptions. Our long-term Financial Services growth algorithm is unchanged, targeting mid-single-digit organic revenue growth and continued adjusted EBITDA margin expansion driven by top-line growth and operating efficiencies. Turning to our Benefits and Insurance results on slide 13. First-quarter revenue was $108 million, representing a 4% decrease year over year. Coming into the quarter, we expected revenue to be down in the first quarter due to tough comps on project-related work and contingent commissions. Contingent commission declines are primarily driven by client attrition that occurred in 2025.
The remaining portion of the decline was primarily driven by the unexpected departure of a single producer and his team in February. This was an isolated departure, and we do not anticipate any similar departures. On the contrary, we expect our net number of producers to continue to increase. As a reminder, our producers are subject to certain restrictive covenants, which we have successfully enforced in the past and intend to do so with this departure. Within the recurring portion of the B&I business, which is consistent with the overall CBIZ, Inc. split of recurring versus nonrecurring revenue, demand fundamentals were strong, and our pipeline remains healthy.
In addition, we continue to attract and develop new validated producers, and our industry-focused growth initiatives are gaining traction. The recurring portion of our business, when normalized for the producer departure, was up approximately 4% in the quarter. B&I adjusted EBITDA in the quarter was primarily impacted by the flow-through impact from the nonrecurring revenue items, as well as planned incremental marketing investments to support our growth initiatives. We are confident in our ability to grow at historical growth rates for the remainder of the year, with B&I supporting our full-year overall growth expectations. Turning to our 2026 outlook on slide 14.
We continue to expect revenue to be between $2.8 billion and $2.9 billion, representing 2% to 5% year-over-year growth. Our adjusted EBITDA is effectively unchanged but is to a range of $465 million to $475 million to incorporate the comparative stock-based compensation adjustment. We have increased our adjusted EPS to reflect a lower share count driven by our share repurchases through April and our stock-based compensation adjustment. Adjusted EPS is now expected to be in the range of $4.00 to $4.10 per share, which assumes a weighted average fully diluted share count of approximately 60.5 million.
Free cash flow guidance is unchanged and expected to be in a range of $270 million to $290 million, representing a 60% conversion at the midpoint of our adjusted EBITDA outlook. While our improvement in the first quarter was largely driven by a one-time benefit, we see ample runway in the near term to drive a higher conversion through lower integration-related spend, lower interest, and improved DSO. On slide 15, our capital allocation priorities are unchanged and are supported by strong free cash flow generation. Our first priority remains funding organic growth and maintenance capital. Second, we remain committed to delevering, targeting a net leverage ratio of less than 2.5 times in 2027.
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And at our current valuation, we view share repurchases as highly accretive and a compelling use of capital and therefore intend to remain active and opportunistic. The strength and scale of our business model, combined with our meaningful free cash flow, gives us confidence in our ability to invest in growth, return capital through repurchases, and achieve our leverage targets over time. With that, I will turn the call back to Jerry.
Jerome P. Grisko: Thanks, Brad. Our top priority in 2026 remains reigniting our growth engine and leveraging our scale. We have clear strategic growth priorities and efficiency initiatives that we are confident will drive value creation for all of our clients and our shareholders. We believe we have the building blocks in place to deliver on our long-term growth algorithm. Now looking forward, we are focused on compounding value through multiple growth engines. We see tremendous opportunity to not only retain business and expand within existing clients, but also to land new clients who seek the multi-service capabilities we now offer.
The work completed in 2025 has built a strong foundation for operating margin expansion as we increasingly deploy technology and leverage global resources. And importantly, we remain committed to our high-return capital allocation priorities that are supported by strong and consistent cash flow. Finally, I want to thank our CBIZ, Inc. team for your continued hard work and our shareholders for your ongoing support. We look forward to further engagement with you all in the months ahead. Operator, please open the call for Q&A.
Operator: We will now open the call for questions. Ladies and gentlemen, at this time, we will begin the question-and-answer session. To withdraw your questions, you may press star and 2. If you are using a speakerphone, we ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then 1 to join the question queue. Our first question today comes from Jeff Silber from BMO Capital Markets. Please go ahead with your question.
Jeff Silber: Peter, let me start with you. I really appreciate you being on the call. Given the tools that are out there, do you think it is possible that some of your clients might be able to do some of the work that you are doing from an AI perspective on their own, perhaps unbundling some of the services and perhaps putting some pricing pressure on some of the services you are providing?
Peter Scavuzzo: Thanks for the question. I do not think the tools are able to provide the expertise and knowledge we can offer in the profession. That is a requirement in the regulated environment that we operate in. They could certainly produce some anecdotal information, but the profession requires, especially in a regulated industry, that we provide the expertise and knowledge we have built over the last several decades, which are critical for delivery. So I do not see that as being a pressing concern.
Jeff Silber: Okay, that is great. And you gave some examples of using AI more efficiently in terms of answering RFPs. Are there other examples, maybe from an expense perspective, that you might be able to use some of the tools to help improve margins?
Peter Scavuzzo: I think it is too early for us to speak on all of the things we are working on right now. We just took this next phase, moving from an assistive to an agentic AI strategy. I would expect as the quarters unfold in the future, we will have more examples that we can provide, similar to the ones that you just brought up.
Jeff Silber: Okay. Appreciate the color. I will get back in the queue.
Operator: Our next question comes from Thomas Wendler from Stephens Inc. Please go ahead with your question.
Thomas Wendler: Hey, good afternoon, everyone. Happy to be up to speed on the company finally, and thanks for taking my question. I am going to start off with the Benefits and Insurance. You had a departure there this quarter. Can you maybe remind us of the pace of increase to the producer count there in 2026? And can you speak to the cross-servicing opportunity as you get some of those Benefits and Insurance hires fully up to speed?
Jerome P. Grisko: Yes, Tom, we are planning on having about a 15% increase year over year. It is a little lumpy from quarter to quarter, but we are off to a good start. We have a very strong pipeline, so we are confident that we will be able to achieve that 15% target for the full year. On cross-servicing, it is a great question. It is often why producers join us. When you think about our go-to-market through industry—and let us say you are a construction client—that construction client may not only need the tax work and attest work that we provide and the valuation work, but they also need surety bonds.
They have a workforce and need payroll, and they have to provide health insurance. A very attractive draw to outside producers into CBIZ, Inc. is that they have all of those arrows in the quiver now, and they can bring it to life through those industry groups. It might be a combination of P&C, payroll, benefits, a 401(k), an employee benefit plan audit, tax, and a whole host of services.
Brad S. Lakhia: Tom, thanks, first of all, for initiating coverage. We are certainly glad to have you on board and appreciate you and the Stephens team. I would just add to what Jerry said. About a year ago we formally stood up the 12 industry groups. As we think about the last twelve months—not only the work around integration but bringing these industry teams together—we are seeing a lot of really positive traction across the two segments and across all the service lines within the segments. We are encouraged about the pipeline of opportunities those industry groups are starting to pull together and are seeing some early wins as a result of that collaboration.
Thomas Wendler: Perfect, thank you. And maybe I will sneak one more in here. You were pretty active in repurchases this quarter. Can you give us some color on how we should be thinking about the pace of repurchases moving forward?
Brad S. Lakhia: Yes, Tom, thanks. We find it quite compelling, as I commented on, so we are going to remain active. We still have a lot of flexibility to do that, driven by our strong cash flow, supported by the recurring nature of our business model, the stickiness that comes with our client relationships, and the strong retention we have. We just feel like fundamentally our business can support continued repurchase activity.
Operator: Our next question comes from Andrew Nicholas from William Blair. Please go ahead with your question.
Andrew Owen Nicholas: Hi, good afternoon. I appreciate you taking my questions. I want to start off on price. I think you mentioned in your prepared remarks that you continue to expect price increases in the mid-single-digit range. Any color you can add on how clients are reacting, given efficiencies from offshoring and AI?
Brad S. Lakhia: Really value-based pricing. Our clients expect that we are going to get efficiencies from a number of sources like offshoring, AI, automation, etc. We are really not seeing pricing pressure there in a big way. And the favorable market conditions within the nonrecurring advisory pieces of our business have continued. We have line of sight to that over the next couple of months at least, so we see pricing as fundamentally pretty strong in those parts of our business.
Andrew Owen Nicholas: Great. And maybe just to follow up on the macro piece. It sounds like the backdrop has continued to improve. Understanding that is one of the major factors driving you between the top and bottom end of your top-line guide, are you a little bit more constructive on those things outside of your control than you were when you gave the initial guide? And more broadly, you commented that organic growth improved as you moved through the quarter—was that predominantly a macro comment, or are you getting some integration improvements helping you on a month-to-month basis as well?
Brad S. Lakhia: A few things to unpack there. In terms of the guide, just like we said a couple of months ago when we put it out, the top end was predicated more on continued favorable market conditions—those conditions that we saw in the second half of last year. We are encouraged that we have seen those continue in the first quarter, and we have line of sight here for at least the next few months. A quarter does not make a year, and as we get into the second quarter, if the conditions remain the way they are as we look to the second half of the year, that would give us encouragement to the top side.
Also, just as a reminder, in the back half of the year we will be lapping some of the integration-related productivity impacts and some client impacts as well. So as you think about the back-half growth rates relative to last year, keep that comparability in mind.
Jerome P. Grisko: On the month-to-month cadence, January started off a little more challenging than we expected, largely because our teams were really working together for the first time in busy season, including using technology during busy season that for many of them was either new or . We had some bumpiness in January, we feel like we fully overcame that and then some as we progressed through the quarter, and if you look at February and March versus last year, we are starting to see the more core organic improvement as well. That gives us further encouragement around meeting our overall guidance.
Andrew Owen Nicholas: Perfect. And if I could just squeeze in a quick modeling question. I think last quarter you outlined kind of a rough mix between first half and second half on both revenue and EBITDA. I think it was 55/45 on revenue and 70/30 on EBITDA. Is that still a good way to think about how the year plays out, or any puts and takes a quarter later?
Brad S. Lakhia: Yes, that still applies. There might be some very minor tweaks, but overall that is still what we are expecting.
Operator: Our next question comes from Faiza Alwy from Deutsche Bank. Please go ahead with your question.
Faiza Alwy: Yes, hi. Thank you. I wanted to follow up on the macro questions. This is obviously the busy season for you, your highest-revenue quarter. As we think about the improvement in organic growth from flat to up 2% this quarter, how much of that is driven by improving market conditions versus better execution on your end because it is a busy season?
Jerome P. Grisko: Hi, Faiza. I would say not improved macro conditions, but continued favorable macro conditions. As you indicated, we are exiting a heavy compliance portion of our seasonality. We will have another one in the third quarter. In between, it is more project-based, discretionary advisory work, which takes the type of climate that we are in to support that work. We are very comfortable—very pleased, actually—with the demand that we saw for that type of work in Q1.
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