CBIZ, Inc. (CBZ)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “we," “us," “our," "CBIZ" or the "Company" shall mean CBIZ, Inc., and its operating subsidiaries.

The following discussion is intended to assist in the understanding of our financial position at June 30, 2026 and December 31, 2025, results of operations for the three and six months ended June 30, 2026 and 2025, and cash flows for the six months ended June 30, 2026 and 2025, and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025, as amended. This discussion and analysis contains forward-looking statements and should be read in conjunction with the disclosures and information contained in “Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q and in “Item 1A. Risk Factors” included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended.

OVERVIEW

We provide professional business services, products and solutions that help our clients grow and succeed by better managing their finances and employees. These services are primarily provided to small and medium-sized businesses, as well as individuals, governmental entities, and not-for-profit enterprises throughout the United States and parts of Canada. As discussed in Note 14, Goodwill, the National Practices practice group, which consisted of a single reporting unit, is now included in the Financial Services practice group to align our internal management and reporting structure with the services provided. As a result of these changes, we now operate with two reportable segments: Financial Services and Benefits and Insurances Services. Financial results of the Financial Service Practice Group for the three and six months ended June 30, 2025 were adjusted to reflect the change in reportable segments.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2025, as amended, for further discussion of our business and strategies, as well as the external relationships and regulatory factors that currently impact our operations.

PROPOSED MERGER

On July 28, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Viking ParentCo., Inc. a Delaware corporation (“Parent”), and Viking MergerCo, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the proposed Merger as a direct wholly owned subsidiary of Parent.

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Pursuant to the Merger Agreement, upon the consummation of the proposed Merger transaction, each share of common stock, par value $0.01 per share, of the Company (the “Shares” and each a “Share”) issued and outstanding immediately prior to the effective time of the Merger (other than certain excluded shares as set forth in the Merger Agreement) will be converted into the right to receive $55.00 per share in cash, without interest thereon (the “Merger Consideration”). The Merger Agreement also provides for the treatment of the Company’s outstanding equity awards in accordance with its terms upon consummation of the proposed Merger.

See Note 16, “Subsequent Events” in Item 1 of this Form 10-Q for further details regarding the proposed Merger. See the section titled, “Risk Factors” included under Part II, Item 1A of this Report for more information regarding risks associated with the proposed Merger.

EXECUTIVE SUMMARY

Revenue for the three months ended June 30, 2026 decreased by $1.3 million, or 0.2%, to $682.2 million from $683.5 million for the same period in 2025. Same-unit revenue decreased by approximately $3.5 million, or 0.5%, as compared to the same period in 2025. Revenue from newly acquired operations contributed $2.2 million of incremental revenue for the three months ended June 30, 2026, as compared to the same period in 2025. A detailed discussion of revenue for the three months ended June 30, 2026 by practice group is included under "Operating Practice Groups."

Revenue for the six months ended June 30, 2026 increased by $9.3 million, or 0.6%, to $1,530.8 million from $1,521.5 million for the same period in 2025. Same-unit revenue increased by approximately $5.0 million or 0.3%, as compared to the same period in 2025. Revenue from newly acquired operations contributed $4.3 million of incremental revenue for the six months ended June 30, 2026, as compared to the same period in 2025. A detailed discussion of revenue for the six months ended June 30, 2026 by practice group is included under "Operating Practice Groups."

For the three months ended June 30, 2026, net income was $18.6 million, or $0.31 per diluted share, compared to $41.9 million, or $0.66 per diluted share, for the same period in 2025. For the six months ended June 30, 2026, net income was $171.4 million, or $2.83 per diluted share, compared to $164.7 million, or $2.58 per diluted share, for the same period in 2025. Refer to “Results of Operations" for a detailed discussion of the components of net income.

The uncertainty in the current economic and geopolitical environment may lead to softness in the demand for the nonrecurring project-based services we offer. We expect this softness in demand caused by the current economic and geopolitical environment could continue and may limit management's ability to accurately forecast demand for the remainder of 2026.

Strategic Use of Capital

Our primary 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 enhance operational excellence. Following the completion of the Marcum Transaction, our second priority is to pay down debt to be at a net leverage ratio of less than 2.5x over time. As a result of the Marcum Transaction and related 2024 Credit Facilities, we have $1,473.5 million of outstanding debt under the 2024 Credit Facilities as of June 30, 2026. In addition, we believe that repurchasing shares of our common stock can be 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.

During the six months ended June 30, 2026, we repurchased 0.2 million shares of our common stock for a total cost of $7.4 million under the ROFR Agreement and 2.1 million shares of our common stock in the open market for $60.1 million pursuant to our Share Repurchase Program (defined below). Additionally, to settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares of our common stock at a cost of $2.6 million during the six months ended June 30, 2026. During the six months ended June 30, 2025, we repurchased 1.0 million shares of our common stock for a cost of $71.3 million under the ROFR Agreement and no share repurchases from the open market. To settle statutory employee withholdings related to vesting of stock awards, we repurchased 0.1 million shares at a cost of $7.8 million during the six months ended June 30, 2025. Refer to Note 11, Common Stock, to the accompanying unaudited condensed consolidated financial statements for further details.

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

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or discontinued at any time and expires on March 31, 2027. The shares may be purchased in the open market, in privately negotiated transactions, and pursuant to Rule 10b5-1 trading plans. Privately negotiated transactions may include purchases from our employees, officers and directors, in accordance with the Securities and Exchange Commission ("SEC") rules. CBIZ management will determine the timing and amount of the purchases based on its evaluation of market conditions and other factors.

RESULTS OF OPERATIONS

Revenue

The following tables summarize total revenue for the three and six months ended June 30, 2026 and 2025:

(1)During the six months ended June 30, 2026, the National Practice practice group was combined with the Financial Service practice group to better align with internal management and reporting structure. As a result, the Financial Services revenue for the three and six months ended June 30, 2025 was adjusted to reflect this change.

Non-qualified Deferred Compensation Plan

We sponsor a Non-qualified Deferred Compensation Plan (the "deferred compensation plan"), under which a CBIZ employee’s compensation deferral is held in a rabbi trust and invested accordingly as directed by the employee.The activities related to the deferred compensation plan are recorded in "Corporate and Other" for segment reporting purposes. Gains and losses resulting from the adjustments to the fair value of the invested assets in the deferred compensation plan are recorded as an increase or decrease to the "Other income (expense), net", are directly offset by the same adjustments as an increase or decrease to compensation expense (recorded as "Operating expense" or "Corporate general and administrative expense") in the accompanying Unaudited Condensed Consolidated Statements of Comprehensive Income. The deferred compensation plan has no impact on “Income before income tax expense” or diluted earnings per share.

Refer to Note 13, Employee Benefits, to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2025, as amended, for further discussion on the Non-qualified Deferred Compensation Plan.

Income and expenses related to the deferred compensation plan assets for the three and six months ended June 30, 2026 and 2025 were recorded as follows (in thousands, except percentages):

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Excluding t

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EXECUTIVE SUMMARY

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. 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 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. The shares may be purchased (i) in the open market, (ii) in privately negotiated transactions, or (iii) under Rule 10b5-1 trading plans. CBIZ management will determine the timing and amount of the transaction based on its evaluation of market conditions and other factors.

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.

RESULTS OF OPERATIONS

We provide professional business services that help clients manage their finances and employees. We deliver our integrated services through the following three practice groups: Financial Services, Benefits and Insurance Services and National Practices. A description of these groups’ operating results and factors affecting their businesses is provided below under "Operating Practice Groups."

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Revenue

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

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

Income and expenses related to the deferred compensation plan for the years ended December 31, 2025 and 2024:

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the years ended December 31, 2025 and 2024:

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Operating Expenses

The following table presents our operating expenses for the years ended December 31, 2025 and 2024:

Our operating expenses increased by $771.6 million. 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 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, 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.”

Corporate General & Administrative Expenses

The following table presents our Corporate General & Administrative (“G&A”) expenses for the years ended December 31, 2025 and 2024:

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

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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

The following table presents the components of Other income (expense), net for the years ended December 31, 2025, and 2024:

(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. The adjustments to the investments held in a rabbi trust related to the deferred compensation plan are offset by a corresponding increase or decrease to compensation expense, which is recorded as “Operating expenses” and “G&A expenses” in the accompanying Consolidated St

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