CBIZ, Inc. Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. CBIZ, Inc. is a leading professional services advisor to middle-market businesses, operating through two primary reportable segments: Financial Services and Benefits and Insurance Services. During the quarter, the company reorganized its reporting structure, consolidating the former National Practice group into Financial Services. The filing reflects the ongoing integration of the Marcum LLP acquisition completed in November 2024.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Revenue | $848.6 million | $838.0 million | +1.3% |
| Net Income | $161.6 million | $122.8 million | +31.6% |
| Diluted EPS | $2.63 | $1.91 | +37.7% |
| Gross Margin | $226.0 million (26.6%) | $228.1 million (27.2%) | -0.6 pts |
| Operating Income | $196.4 million | $200.0 million | -1.8% |
| Operating Cash Flow | ($25.5 million) used | ($88.3 million) used | Improvement |
| Total Debt Outstanding | $1,551.5 million | $1,455.9 million | +6.6% |
| Cash & Restricted Cash | $69.3 million | $49.6 million | +39.7% |
Material Changes vs. Prior Period
- Acquisition Gain: Net income was significantly boosted by a $58.0 million gain from acquisition-related adjustments, primarily a $57.2 million working capital settlement related to the Marcum transaction. Excluding this gain, operating income declined slightly year-over-year.
- Segment Performance: Financial Services revenue grew 2.1% to $740.3 million, driven by advisory and accounting services. Conversely, Benefits and Insurance Services revenue declined 4.2% to $108.2 million due to decreases in human capital, life insurance, and property/casualty lines.
- Expense Management: Total operating expenses increased 2.1% to $622.6 million. Excluding the impact of the non-qualified deferred compensation plan, expenses rose 2.2%, driven by higher facility, technology, and direct costs.
- Share Repurchases: The company repurchased approximately 1.2 million shares for a total cost of $29.0 million, including $25.5 million in open market purchases and $3.5 million under the Right of First Refusal (ROFR) agreement.
Outlook, Risks, and Contingencies
- Guidance & Outlook: Management notes uncertainty in the economic and geopolitical environment may lead to softness in demand for nonrecurring project-based services. They expect this softness to potentially limit forecasting accuracy for the remainder of 2026. Strategic priorities remain funding organic growth, paying down debt to a net leverage ratio below 2.5x, and strategic acquisitions.
- Goodwill Impairment Risk: Due to a decline in market capitalization and increased discount rates, the excess of fair value over carrying value for the Financial Accounting Services reporting unit narrowed to approximately 7.4%. Management warns that further declines in market cap or adverse macroeconomic conditions could trigger future impairment charges.
- Legal Proceedings: CBIZ is a non-bellwether defendant in the multidistrict litigation regarding the MOVEit cyberattack. The company cannot currently estimate potential losses. Additionally, the company settled litigation with former employees in June 2025, receiving a $12.5 million gain recorded in the prior year.
- Liquidity: The company maintains a $2.0 billion credit facility with approximately $333.4 million available as of March 31, 2026. It is in compliance with all debt covenants.
Investor Verification Checklist
- Quality of Earnings: Verify the sustainability of Q1 2026 net income by excluding the one-time $58.0 million acquisition gain to assess core operational profitability.
- Goodwill Valuation: Monitor the 7.4% margin of safety for the Financial Accounting Services reporting unit; a further drop in stock price could necessitate a material impairment charge.
- Working Capital Seasonality: Confirm the trend of cash flow recovery in Q2 and Q3, as Q1 typically sees significant cash usage due to seasonal tax and accounting billing cycles.
- Debt Leverage: Track progress toward the stated goal of reducing net leverage to below 2.5x, given the current debt balance of $1.55 billion.
- Segment Mix: Analyze the divergence between the growing Financial Services segment and the declining Benefits and Insurance Services segment to understand long-term revenue stability.