Q4 2019 Investor Presentation FINAL - MeetMax

2019 Q4 Investor Presentation

February 11, 2020

Safe Harbor Statement

The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “likely,”“possibly,” “probably,” “goal,” “opportunity,” “objective,” “target,” “assume,” “outlook,” “guidance,” “predicts,” “appears,” “indicator” and similar expressions. Forward-looking statementsinvolve a number of risks and uncertainties. In the normal course of business, Insperity, Inc., in an effort to help keep our stockholders and the public informed about our operations, mayfrom time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits orother consequences of such plans or strategies, or projections involving anticipated revenues, earnings, unit growth, profit per worksite employee, pricing, operating expenses or otheraspects of operating results. We base the forward-looking statements on our expectations, estimates and projections at the time such statements are made. These statements are notguarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions aboutfuture events that may prove to be inaccurate. Therefore, the actual results of the future events described in such forward-looking statements could differ materially from those stated insuch forward-looking statements. Among the factors that could cause actual results to differ materially are: (i) adverse economic conditions (ii) our liability for WSEE payroll, payroll taxesand benefits costs; (iii) increases in health insurance costs and workers’ compensation rates and underlying claims trends, and state unemployment tax rates; (iv) the inability to securecompetitive replacement contracts for health insurance and workers’ compensation insurance at expiration of current contracts or in the event of the insolvency of such carriers; (v)vulnerability to regional economic factors because of our geographic market concentration; (vi) cancellation of client contracts on short notice, or the inability to renew client contracts orattract new clients; (vii) our potential liability for client and employee actions due to the co-employment arrangement; (viii) regulatory and tax developments, including health care reform,and possible adverse application of various federal, state and local regulations; (ix) failure to manage growth of our operations and the effectiveness of our sales and marketing efforts; (x)the impact of the competitive environment and other developments in the human resources services industry, including the PEO industry, on our service and technology offerings, growthand/or profitability; (xi) disruptions of our information technology systems; (xii) the impact of data theft, cyberattacks or other security vulnerabilities on us or our vendors; (xiii) failure tocomply with privacy, data protection and cybersecurity laws; (xiv) failure of certain third-party providers, such as financial institutions, data centers or cloud-service providers; (xv) our abilityto integrate or realize expected returns on our acquisitions; (xvi) an adverse final judgment or settlement of claims against us; and (xvii) disruptions to our business resulting from theactions of certain stockholders. These factors are discussed in further detail in Insperity’ s filings with the U.S. Securities and Exchange Commission. Any of these factors, or a combinationof such factors, could materially affect the results of our operations and whether forward-looking statements we make ultimately prove to be accurate.

Except to the extent otherwise required by federal securities law, we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances after thedate they are made or to reflect the occurrence of unanticipated events.

Review of Insperity

Co-Employment

Clients outsource entire HR function toa single strategic partner

Client enters into agreement with Insperity toestablish a relationship between themselves,

their employees and Insperity

Insperity assumes or shares certain HRresponsibilities and risks, empowering clients to

focus on operating and growing their corebusiness

Traditional Employment

Expands market opportunity beyondcore PEO model

Address clients who are not ready forco-employment and may prefer more flexibility

and autonomy in their Human CapitalManagement (HCM) strategy

Meet prospects at their point of need and addressdistinct elements of their HCM strategy

* Available for an additional fee.

† All insurance products are offered and sold only through a licensed insurance broker,such as Insperity Insurance Services LLC (CA license #OE22586), or their licensed agents.

A comprehensive solution

Insperity’s Co-Employment model incorporating Software with a Service has jumped the chasm to

Early Majority compared to the Late Majority stage of the HCM Software as a Service Solution.

PEO HCM

Software with a Service

Where is the PEO industry in the adoption life cycle?

5%

29%

32%

34%

Firms < 5 employees Firms 5 - 99 employeesFirms 100 - 4,999 employees Firms 5,000+ employees

What is Insperity’s market opportunity?

Insperity competes in a large, fragmented and highly attractive market

(1) U.S. Census Bureau Data; Insperity management estimates.(2) Represents businesses with less than 5,000 employees.

Total Workforce(1)

~115 Million EmployeesSmall To Midmarket(2) Workforce(1)

~71 Million Employees

95%

5%

Traditional employmentCo-employment

Who does Insperity target?

Insperity is focused on being a trusted advisor to the best small-to-midmarket businesses

EMPLOYMENT RISK

BU

SIN

ES

SS

UC

CE

SS

HIGH LOW

ST

RU

GG

LIN

GT

HR

IVIN

G

Workforce Optimization™

Workforce Acceleration™

Who are Insperity’s clients?

Insperity currently provides Workforce Optimization solutions for ~8,900 clients

15%

17%

15%6%

11%

4%

9%

7%

3%

7% 6%

Computer and information sciences

Finance, Insurance, Real Estate

Management, administration, consulting

Medical services

Manufactuing

Construction

Wholesale trade

Engineering, accounting, legal

Retail trade

Other

Not-for-profit and similar organizations

FY 2019 Average Paid Worksite Employees (“WSEs”): 235,547

How does Insperity serve its target market?

Insperity’s solutions address a diverse set of client types and needs

Small Business Core Emerging Growth MidMarket

Overview

Likely newly formed,require HR function

on an as needed basis

Small businesswith less than 50

employees; requiresHR function to evolve

Typically a growingorganization struggling

with HR complexityas their employee

base grows

Establishedorganization; requires

customizableHR function

WSEs < 20 21 - 49 50 - 149 150 – 5,000

Approach Essential Collaborative Integrated Strategic

Customization Low Low / Medium Medium / High High

Engagement Responsive Dedicated Proactive Engaged

How is Insperity different? Our breadth of services.

Bundled Solutions Providers Point Solutions Providers

Insperity Other Bundled Insurance Brokers Payroll Processors Payroll Processors

Complete HRSolution for Small

Business

MidMarket ServiceOfferings

High Touch / HighValue Solution

High Quality RiskManagement and

Cost Stability

Cloud Technology

Insperity sits at the nexus of Business,

Software and Insurance Services

SoftwareServices

Advisory Services

InsuranceServices

BusinessServices

How is Insperity different?Our depth of services.

Built upon Insperity’s extensive HR knowledge base, the Insperity Premier platform is a cloud-based human capitalmanagement system that maximizes the power of Workforce Optimization, our industry-leading co-employment solution.

HR Specialist

Safety Consultant

Performance Specialist

Recruiting Specialist

How is Insperity different? Our level of care.

Insperity Offers a High-Touch Service on a High-Tech Platform

Team Manager

Client Liaison

Contact Center

Payroll Specialist

Business PerformanceAdvisors

ChannelPartners

RewardsProgram

Cross-SellingPrograms

Quarterback for ourservices

Trusted advisor to thelocal business

community

Guiding clients to theright solutions; execute

bundle plus strategy

Partners in ProfessionalServices, Insurance and

Banking

Leverage partners forleads/referrals

Re-engage clients

Build value in theInsperity/Client

relationship

Gain referrals

Leverage investmentsin core sales &

marketing

Increase prospectawareness of our otherbusiness products and

services (BPS) offerings

How does Insperity go-to-market?

Key components of our strategy

How does Insperity go-to-market? (cont.)

National sales and

service infrastructure

2019 Revenue Contributionby Region

• Southeast 12%• Northeast 26%• Central 17%• West 21%• Southwest 24%

Bellevue

San Francisco

Los Angeles

San Diego

Phoenix

Austin

San Antonio

Dallas/Ft. Worth

Houston

Oklahoma City

Denver Kansas City

Minneapolis

St. Louis

Milwaukee

Chicago

Indianapolis

Columbus

Boston

New York

PhiladelphiaNew Jersey

Maryland

Washington D.C.

Raleigh

Charlotte

Atlanta

Nashville

Orlando

Ft. Lauderdale

Stamford

Pittsburg

San Jose

Portland

Tampa

Las Vegas

• Sales (75 Offices, 38 Markets)• Service Center (4 Locations)

Corporate Headquarters

Sacramento

Providence

Total Service Fee(quoted as a % of Employee’s Wages)

HR Services FeeSeparate Direct CostProgram Allocations

Bundle Plus / Add-on Serviceswith discounted pricing for Workforce Optimization

customers

Human ResourcesManagement

Recruiting and Selection

Training and Development

Policies and Practices

Payroll Administration

Government Compliance

Employee Benefits

Employer Payroll Taxes

Workers’ Compensation

Employer Liability

Management

Performance Management

Direct Placement Recruiting

Employment Screening

Retirement Services

Time and Attendance

Expense Management

Organizational Planning

Insurance Services

Payroll Services

Financial Services

Human Capital Management

How does Insperity price its Workforce Optimization service

Financial Results

Key financial metrics

Average Paid Worksite Employees Average Trained BPAs

Year-Over-Year Paid WorksiteEmployee Growth %

14% 10% 14% 13% 7%

*Amount represents midpoint of Financial guidance issued on February 11, 2020.

165,850

182,696

209,123

235,547

252,050

359

406

470

528

584

300

350

400

450

500

550

600

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

2016 2017 2018 2019 2020E*

Key financial metrics (in millions)

Adjusted EBITDA(1)

Year-Over-Year Growth %% of Gross Profit

$141

$178

$240$250

$262

$0

$50

$100

$150

$200

$250

$300

2016 2017 2018 2019 2020E*


1) Please see reconciliation to GAAP measure in the Appendix. Adjusted EBITDA represents EBITDA adjusted to add back stock-basedcompensation expense, one-time tax reform bonus, charitable donations to Hurricane Harvey relief efforts and costs associated withstockholder advisory expenses.

28% 26% 35% 4% 5%29% 31% 35% 34% 33%


Adjusted EBITDA(1) Per Worksite Employee Per Month

$71

$81

$95

$88 $87

$25

$35

$45

$55

$65

$75

$85

$95

$105

2016 2017 2018 2019 2020E*




Adjusted EPS (1)

$1.79

$2.45

$3.75

$4.15$3.94

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

2016 2017 2018 2019 2020E*

Year-Over-Year Increase (Decrease) % 63% 37% 53% 11% -5%


1) Please see reconciliation to GAAP measure in the Appendix. Adjusted EPS represents EPS adjusted to add back stock-basedcompensation expense, one-time tax reform bonus, charitable donations to Hurricane Harvey relief efforts, costs associated withstockholder advisory expenses, the enactment of U.S. tax reform and disaster credits.

2) 2020 adjusted EPS guidance includes a full year effective tax rate of 28% compared to 20% in 2019 due primarily to less tax benefitassociated with the vesting of long-term incentive plan and time-vested restricted shares. The higher effective tax rate is expected toreduce earnings by approximately $0.28 per share.

(2)

Return to investors from cash flow and debt (in millions)

$110

$141

$178

$240$250

$67

$176

$39

$113

$203

$21 $21

$66

$33$49

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

$275

2015 2016* 2017** 2018 2019

Adjusted EBITDA Share repurchases Dividends

*2016 share repurchases includes a dutch auction tender offer that was completed in January 2016 resulting in the repurchase of six million sharesat a cost of $23.75 per share, plus transaction costs. The tender offer was funded with approximately $40 million of cash and $104 million of debt.

**2017 dividends includes a $1 per share special dividend paid in Q4 2017.

Appendix

Note: Financial guidance referenced above issued on February 11, 2020.

(1) Adjusted EBITDA represents EBITDA adjusted to add back stock-based compensation expense.(2) Adjusted EPS represents EPS adjusted to add back stock-based compensation expense.

Full year and Q1 guidance

FY 2020 Guidance Q1 2020 Guidance

Average paid WSEs 249,700 – 254,400 238,000 – 240,200

Implied y-o-y increase (decrease) in average paid WSEs 6% - 8% 5.5% - 6.5%

Adj. EBITDA(1) $250 - $274 $98 - $103

Implied y-o-y increase (decrease) in Adj. EBITDA 0% - 10% (3.4)% - 1.5%

Adj. EPS(2) $3.73 - $4.16 $1.61 - $1.70

Implied y-o-y increase (decrease) in Adj. EPS (10)% - 0% (18.7)% - (14.1)%

Adjusted EBITDA reconciliation (in millions)

Note: Insperity management believes adjusted EBITDA is often a useful measure of the company’s operating performance, as it allows for additional analysis of thecompany’s operating results separate from the impact of these items. Adjusted EBITDA should not be considered as a substitute for, or superior to, measures offinancial performance prepared in accordance with GAAP.

* Based on the midpoint of the guidance issued on February 11, 2020.

FY 2017 FY 2018 FY2019 2020E*

Net income (GAAP) $84.4 $135.4 $151.1 $136.5

Interest expense 3.2 4.7 7.7 10.7

Income tax expense 45.7 47.0 38.5 53.0

Depreciation and amortization 18.2 22.8 28.7 34.4

EBITDA 151.5 209.9 226.0 234.6

Stock-based compensation 24.4 20.4 24.0 27.6

Hurricane Harvey donations 2.0 - - -

One-time tax reform bonus - 9.3 - -

Other (0.2) - - -

Adjusted EBITDA $177.7 $239.6 $250.0 $262.2

Note: Insperity management believes adjusted net income is often a useful measure of the company’s operating performance, as it allows for additional analysis of thecompany’s operating results separate from the impact of these items. Adjusted Net Income should not be considered as a substitute for, or superior to, measuresof financial performance prepared in accordance with GAAP.


Adjusted net income (in millions)

FY 2017 FY 2018 FY 2019 FY 2020E*

Net income (GAAP) $84.4 $135.4 $151.1 $136.5



One time tax reform bonus - 9.3 - -

Other (0.2) - - -

Total pretax non-GAAP adjustments 26.2 29.7 24.0 27.6

Tax effect on non-GAAP adjustments (9.4) (7.6) (5.6) (7.8)

Enactment of U.S. tax reform $2.5 - - -

Tax effect of disaster credit (0.7) - - -

Adjusted net income $103.0 $157.5 $169.5 $156.3

Adjusted EPS reconciliation

Note: Insperity management believes adjusted EPS is often a useful measure of the company’s operating performance, as it allows for additional analysis of the company’soperating results separate from the impact of these items. Adjusted EPS should not be considered as a substitute for, or superior to, measures of financialperformance prepared in accordance with GAAP.


(1) 2020 adjusted EPS guidance includes a full year effective tax rate of 28% compared to 20% in 2019 due primarily to less tax benefit associated with the vesting oflong-term incentive plan and time-vested restricted shares. The higher effective tax rate is expected to reduce earnings by approximately $0.28 per share.

FY 2017 FY 2018 FY 2019 FY 2020E*

EPS (GAAP) $2.01 $3.22 $3.70 $3.43

Stock based compensation 0.58 0.49 0.59 0.71



Other (0.01) - - -



Enactment of U.S. tax reform 0.06 - - -


Adjusted EPS(1) $2.45 $3.75 $4.15 $3.94