CBIZ, Inc. (CBZ) Earnings Call Transcript & Summary

Hello, everyone. Good afternoon. Thank you so much for joining, and thank you to the team at CBIZ for giving us this opportunity to host this session today, really excited about it. So from -- just so you guys don't know me, I'm Faiza Alwy. I head up the research for business information and professional services companies here at Deutsche Bank. And through the course of this, if you have any questions for management, please do feel free to e-mail me, and I will ask your question through this process. So from CBIZ, we have Jerry Grisko, CEO and President. We have Chris Sikora, who's Head of IR and Corporate Finance. Dan Richards, who's Head of Business Planning and Analysis; Lori Novickis, Director of IR; and Peter Scavuzzo, who's the Chief Strategy Officer and National Leader of Technology Transformation and Innovation. And Brad, unfortunately, the CFO was not able to join, but I think we have a good group from CBIZ. So I'll get started. Jerry, I'll throw it to you first. Maybe you could just start with a very quick intro on the company for those that may not be familiar.

Happy to do so, Faiza. Thanks for having us today. For those of you who don't know CBIZ as well, we're a leading provider of professional business services to middle market companies. We provide accounting, tax, advisory services, along with a host of other services, including benefits, insurance, payroll, technology and related services to our clients. We serve principally a middle market client. The attributes of that client are that middle market being a very large total addressable market, some measure that about $400 billion. So very, very large. That client tends to be underserved, oftentimes being served by a local market service provider or maybe a regional service provider. The characteristics of that provider are that they're very talented people, but they oftentimes lack the breadth of services and the depth of subject matter expertise that, that middle market client needs in this increasingly complex environment. They rely on advisers like CBIZ for their most important decisions that they make, expanding plants, growing overseas, making big capital investments. They turn to us and the services that we provide to them provide a foundation context around being able to help them through those very important decisions. Some of the attributes of the business that are unique relative to others are we provide largely essential services. Our revenues are generally about 70% of them recur year in and year out. So if you think about the services we provide, our clients need someone to help them with their tax returns and with their assurance services, with their payroll, with their insurance services as well. So those services tend to recur year-over-year. About 30% are more project-based. Those are higher-value services. So when our clients are, in fact, making those very important decisions, they oftentimes need specialized expertise, and we can come in and help them with those things. We have very high retention rates among our clients, about 90% year-over-year. And CBIZ as an entity produces very strong cash flow year in and year out. So that's some very attractive attributes. About 16 months ago, we completed the largest transaction in our history with the acquisition of Marcum. That allowed us to enhance the breadth of services that we can bring to our collective client base, now over 130,000 clients strong. It provided critical scale in key geographic markets that are very strong markets for that middle market client. It provided us with the size and the scale to make investments in critical areas, including offshoring, now artificial intelligence and technology and in branding. It allowed us to attract a different level of talent and retain our top talent throughout the organization at levels that were very important to us. And it provided us with multiple levers to be able to expand the share of wallet and the new logos that we can bring into the organization. So that transaction was transformative for us, and we're really excited about that. As we enter into 2026, also very encouraged by the backdrop for the beginning of the year. Compared to this time last year, more favorable market conditions. The integration of the Marcum transaction, which largely occurred in the second half of last year, our work around that is largely behind us. A couple of things -- a few things we still need to complete, some real estate integration, some systems integration, but the vast majority of the tasks and the items are largely behind us. And we're beginning to see the value of bringing the transaction to life through our industry groups and through some of the work that we're doing, and we would expect that to start to accelerate into '26 and beyond. So with that, Faiza, by way of background, I'll turn it over to you for...

Yes, absolutely. Thank you so much, Jerry. I guess I'll actually start with the Marcum acquisition, given that, that has been such a transformative acquisition for you. And now that much of the integration is complete, I guess, reflecting back on the acquisition, what do you think has gone well? What do you think could have gone better? And maybe you can expand a little bit more on some of the opportunities that you're most excited about from here as it relates to Marcum.

Yes. I would say, without question, what we're most excited about is the talent that came and joined us. I mean, top to bottom from the leadership all the way down through the ranks, just really, really talented team of people and how well that they've come together with our groups. We were, in fact, in New England, in fact, probably 6 weeks ago with a group of leaders. I think there were 40 or 50 people in the room, kind of half from each of organizations. And you couldn't tell what organization they came from. So just the kind of how well those teams have come together, again, the strength of the teams, the strength of the clients that they serve. And they brought to us some very attractive specialty areas, things like digital assets practice, alternative investments practice, their SEC capital markets practice. So they brought to us some very interesting and growing and complementary service lines and areas that we can go to business -- go to market. We brought to them depth of services, right? So -- or that breadth of services. So we built -- brought more advisory services, and we brought all the benefits and insurance services. So now that kind of combination of that full breadth of services and that deep subject matter expertise into some of those special areas are very exciting for us.

Yes. Yes. Excellent. Is there anything that you want to highlight as maybe something that could have gone a little bit better? I know at the time of the acquisition, you talked about potentially some new sectors that you would -- you could potentially enter. Maybe talk a little bit about that and put a finer point around some of the revenue synergies that you're contemplating.

Yes. So from the things that we weren't -- didn't fully expect, listen, whenever you bring 2 organizations of almost like size together, there's always some friction in productivity, right? So what was important to us is really as quickly as we could to bring everybody together physically as quickly as we could, and we've done a lot of that, put them on the same systems, the processes, the technology, the workflows. And so I guess when we look back, I think there was some productivity loss through the second half of '25 that may not have always been anticipated, but it's inevitable when you bring 2 organizations together. You mentioned some service lines. I mentioned those, again, the strength of some of these fastest-growing service lines within CBIZ, this digital assets group that we are very unique in our -- among our peer group with the size and the scale and the deep expertise there we have there. We think there's a real opportunity to accelerate growth. Again, this SEC Capital Markets practice that they brought over is really exciting, very exciting for us. The technology practice, the scale that we now have coming out of the transaction should provide really exciting growth opportunities for us. And then it's just a combination of bringing these things together, things like the -- our offshoring capabilities now. They were more built out on the Assurance side in the Philippines. We were more built out in India on the tax side. Together, we can take advantage of all those things. And just the investments we can make in the business. So I'm really, really pleased with what we have and what it presents for us for the future.

All right. Wonderful. I guess let's pivot to your revenue outlook. You talked about the environment being somewhat better starting out the year. I know you've talked about 90% client retention, sort of mid-single-digit pricing, some contribution from existing -- expansion of existing relationships, adding new logos and all of that, and all of that gets you to roughly 2% to 5% revenue growth. Could you maybe talk about each of those drivers and kind of where you have the most confidence? And more importantly, sort of what you're doing internally to drive this growth?

Yes. I think the 3 levers, really, pricing is pretty much -- we're highly confident with the mid-single-digit pricing. We've historically been able to achieve that pricing. We saw that last year, and our engagement letters really for the work that we're doing in the busy season have gone out in that kind of mid-single-digit range. So we're really comfortable there. On the next 2 levers, which are really kind of share of wallet and new logos, what's going to bring those to life, really excited about that is the industry groups. When we brought the 2 organizations together, we really segmented our business into 12 industry groups, all of which have sizable scale. And now by being able to bring in a breadth of services into those industry groups. So if you think about a real estate developer to be able to bring for them not only tax and accounting, but also valuation work and cost save work and all the specialty advisory work around that and now even broader some insurance needs, they may need a surety bond. So what we've done within each of those industry groups is we have a leader in place of all industries and then each of the industry groups has a leader and each of our people are assigned to one of those groups, and we're working now to develop really highly tailored bespoke solutions that we can bring using that breadth of services. So that will expand wallet share, when we come into that client and be able to talk to them about all the things that we can do for them, that will expand share of wallet. And it also allows us to go out and attract new logos, clients because it's such a unique offering in the market, they can't receive that from any one of our competitors. So we think it will help us in both of those areas.

Yes. So I guess just to put a finer point on this in terms of your visibility as it relates to revenue growth, it sounds like what I'm hearing you say is that you feel very confident about the pricing part of it, which is that mid-single digits and where there may be -- where you're dependent on market performance is where -- whether you get from 2% to 5%.

Yes. I would say, again, 3 levers, right? Pricing, this kind of share of wallet new logos and the last one being kind of the advisory, more kind of project-oriented advisory. And that's the piece that is more market dependent. As you'll recall at the introduction, I mentioned that 70% of our revenues are recurring. So those things kind of come in the door year in and year out regardless of business conditions. But that 30% is highly dependent on market conditions. And that's really the -- within the range of 2% to 5%. If we see something like the climate that we had in the back half of '25 and what we're beginning to see into '26, we're kind of mid to upper end of that range. And if it was something less favorable, it might be at the lower end of that range.

Got it. And then, Jerry, I really want to get into this. You noted on the call that you're not seeing any impact from AI on demand or pricing at the moment. I do want to ask you about the FT article on KPMG, Grant Thornton, kind of what your perspective is on that? And then we'll talk a little bit more about how you think AI might change the industry.

Yes. Here's what I would say. I can't really comment on the Grant Thornton, KPMG situation other than to say, if you look into that, the total amount of fees on that engagement actually went up, right? So when we looked at it, they may have taken fees down in one area, but they went up. But that's all. I don't know any more detail than that. What I would say is we're not having that conversation with our clients. Our clients are not coming to us, and I made this comment on our most recent call that we've not seen any impact on demand, and we've not seen any impact on pricing from AI nor would we expect to. It's not the approach that the clients take with us. Middle market clients are really distinct in this way in that, first of all, the vast majority of our fees are fixed priced -- so well, we do a certain body of work for the client for a certain price. They don't come back to us and ask how much of that was offshoring and did you gain efficiency out of that? Or did you gain efficiency out of automation or other tools. We just generally don't have that conversation. They are generally resource constrained in the areas of the work that we provide. And what they're really looking for is someone who's taken the time to get to know them, to know their industry, to know their needs, to have context around the advice. And so we're not having pricing discussions with our clients around the fact that we may be gaining some efficiency through offshoring or automation or any other form of efficiency.

Yes. And just -- and I know we have -- this happened last year where it wasn't related to AI. I know you said that, but you kind of assumed somewhat higher pricing at the beginning of the year, and it ended up being lower. I think it would be helpful for you to just give us a little bit of background on that, not to entirely rehash the past, but just for those that may be a little confused and thinking that there was an AI impact last year. I think just...

Yes, definitely not AI impact. What we found last year was we actually -- in the years '23 and '24, I mentioned earlier that we were able to get mid-single digits. In '23 and '24, just because of an inflationary environment, we were actually getting -- able to receive a little bit more than mid-single-digit pricing. And we went into '25 expecting that, that climate would continue and the climate was different, right? So as it settled out, settled out into the mid-single-digit pricing, that's kind of the baseline for what you would expect in this business kind of in normal business conditions and climates. And that's what we saw more last year as opposed to an inflationary environment. Now if we were in the future to find a more inflationary environment again, then I think our pricing does go more into that kind of 6%, 7%, 8% to match the environment.

Understood. Understood. Okay. Okay. And I guess let's talk a little bit more about the changes the industry might experience from AI. I heard your comments on the call around the need for trust. Maybe you can highlight that point a little bit more for us, give us some examples to really drive home this point, sort of how important is trust in the world of accounting and tax and really all of your advisory business...

Well, specifically as it relates to accounting, they refer to the accountant as the trusted adviser to the business owner, right? And so while we believe that AI, despite the fact that it's not having an impact today, it will change the way we work in certain ways over time. It will make us all more efficient. It will augment the work we do. It will allow us to come up the value chain and the type of work we do for our client. But it will never take the place of that trusted adviser, that trusted relationship in part because the client relies on us for the judgment that we bring to the engagement, for the deep knowledge that we have of the client and of their industry for our assessment of the risk that we're talking about and the risk tolerance of the client for context around the engagement and for kind of a holistic view of what the client is trying to achieve in a particular situation. And so yes, while we may be able to do certain portions of the work more efficiently as a result of AI, it is that really kind of intimate trusted relationship we have with our client that technology will never displace.

Yes. And maybe this is a good time to bring Peter into the conversation. Maybe you can talk about some of the initiatives that you have from an automation and offshoring perspective and talk about some of your initiatives right now?

Yes, sure. So to really maximize the value of AI, it really starts with our people and upskilling our people. And if you kind of go back to '25, our primary objective was to introduce assistive AI to our entire population. And we did do that. We provided a unique custom-built product that we deployed to everyone in the CBIZ organization and interface to empower them with assistive AI technologies. And that started bringing the talent pools skill set up, raising their ability to comprehend AI's value and start applying it to their specific jobs and functions. In '26, our focus is moving from assistive AI to Agentic AI. And in order to do that, we are anchoring in '26, an Agentic operating platform that we'll be putting in place throughout the organization. And with that platform, we'll start introducing discrete agents into our workflow that we can start weaving into the day-to-day jobs of our people. Those initiatives will really take hold probably in Q3, Q4 of this year, where we'll have really good tangible examples of not only one-off agents, but starting to weave them together to start tackling end-to-end workflow. In addition to that, we're focusing on what we call an intelligent operating system. And our vision there is to create a single cohesive employee intelligence portal that applies CBIZ's context to the agent operating platform and weaving that together to enhance the relationship our people have with AI and our clients working with us have AI. And the other initiative that is critical going back to our people is we have a commitment in '26 to provide a fundamental AI training across the entire organization with pockets of people getting accelerated advanced training so that they could help be part of us tackling the overall AI initiative. While that's all happening, we also recognize that the standardization of our business, our processes and our data are critical, and we're working on that because we don't believe AI is turnkey. So by standardizing our processes and procedures and our data, we activate the other piece of this is when we purchase or align with a vendor in the ecosystem that provides softwares to our business. The correct vendor relationship has investments in AI as well that we can then maximize and take advantage of. And an example of that is in our tax practice, where it was very elusive to be able to extract footnotes from K1s. Now with that technology, with AI in place there, we believe that will help us really accelerate our ability to perform in that particular area. We also believe that our journey that we're doing within CBIZ is going to port over to our middle market client. The middle market client doesn't know where to turn to. They're going to be dealing with the same challenges and the same fears that pretty much everybody is. So we're going to bring that knowledge and that value to help our clients go through that similar journey and to help them in their pursuits of AI. The last area is we expect AI to introduce complexity in the everyday operating of our organizations that we service, the middle market client. And that complexity now aligns back to that trusted adviser that we're really anchored in with our clients on. And that complexity could be introduced anywhere in the way they're operating, including in their financial operating model. So again, just like our profession -- when we started with auditing financials, we progressed by auditing cyber. We believe that's an opportunity for us to step in and be that trusted adviser in that AI ecosystem that our clients are embarking on.

Okay. That's a very interesting point. Can you talk about like how -- are you starting to see some of this come through yet? Or I imagine it's a bit too early. And when it does come through, like how do you -- I know you mentioned a lot of your contracts are fixed price or outcome-based. Sort of how does that work when you have -- when the job becomes a little bit more complex?

Jerry, did you want to get that? Yes. So the -- it's still early stage, to be honest with you. If you kind of pool the clients we work for, they're middle market clients. They're on a very early stage in playing with AI. But we anticipate on a go-forward basis, as they start incorporating in AI knowingly or unknowingly into their everyday life, it will create the complexity. And with our team, with the investments of talent that we've been able to bring in and us hopefully being on the front end of this AI journey, we'll be able to very naturally and easily step in there and provide clarity and guidance and really position ourselves to stand out in servicing our middle market client.

Okay. Okay. I guess maybe for you, Jerry, like when you've had these situations historically, like you mentioned cyber, for example, like what -- how does the contract change? Like does that suggest you take higher pricing? Does -- how does the -- how do you benefit from it from a revenue perspective?

Yes, Faiza, that's a great question. So if we know it going in, obviously, it's priced into the engagement, and it's typically premium price because our competitors typically don't have those services. So cyber was a perfect example when cyber really kind of became what it is today, and we were unique in the resources that we had to be able to bring to the market. That just got built into those fixed price contracts and was into our engagement, and we provided those services to our clients. And they gladly paid the number, the price because, again, others in our competitive set couldn't provide those services. I expect the same thing will happen with AI. If we're already in an engagement, then it really comes in out of scope work, right? So we do have the ability even in a fixed price contract where we identify work that needs to be done that wasn't anticipated in the engagement to expand that pricing as we work through the engagement.

Yes. Okay. Okay. And then just going back to the automation and the productivity. I mean, again, I imagine it's too early, but do you have a sense for like how to think about some of those savings? Does it mean fewer new hires? Or how does that again translate into the financials of the company in your view?

Yes. Well, what we think is -- what we've seen in the past is take offshoring, for example, right? When people -- when our industry started to offshore those savings weren't passed on through to the client. In fact, the discussion with the client is we're able to hold your pricing increase year-to-year at a mid-single-digit level because we're leaning into these efficiency opportunities that we have like offshoring to be able to keep your pricing there. So we expect that as AI and other automation becomes more available to us, that will expand margins within the organization. And again, with fixed fee pricing, we think that, that's an opportunity for us on the bottom line. We'll see where it goes over the long term, but certainly, in the short midterm, that's what we would expect. As far as resources are concerned, I think we look at it in a couple of different ways. First of all, over time, we will hire a different profile of person, not just a traditional CPA or traditional certify this or certify that. Things like data scientists, data analytics and prompt writers around AI. So I think the workforce expands. I think it's just the profile of the person may change over time. And also, I think the days of the very traditional kind of triangle, where a lot of people at the bottom at the entry level and then very few people at the top, I don't see -- you hear people talking about a diamond. I don't think a diamond works because you don't have the people at the top of the funnel to develop over time. But I could see something that more like a house, right, where you have the top of the pyramid, but then kind of flatter walls going down over time.

Yes. Okay. But it's too early for you to make any changes as it relates to new hires, new -- whether it's campus recruiting or entry-level hiring. Is that?

No. We are even today looking at different profiles of people. But as far as the numbers of people, not dramatic changes at this point.

Yes. Okay. And then just to talk about offshoring a little bit. So I know you mentioned Marcum, more offshoring in the Philippines, you guys have had historically more offshoring in India. Just have you been rethinking offshoring just in light of AI and automation? Or just help me think through like what are the tasks that happens from an offshoring perspective versus what are the tasks that can be ordered? Because in my head, I'm thinking if you're offshoring, that's usually typically repetitive tasks. And I would think that those are the ones that can be automated via AI, but just help me think through, I guess, what roles get offshore and what roles get more automated.

Yes. We think -- basically, first of all, we think of offshoring as access to a global workforce, right, more than just kind of the efficiency element of offshoring, it's really access to a global workforce. So if you -- and I know you track the accounting industry, for years, the discussion has been around kind of resource constraints, right? Fewer students, baby boomers aging out, fewer students coming in. So we really needed to be able to solve that issue, and that was largely solved industry-wide through offshoring and access to a global workforce. I think what will happen over time is we will still access a global workforce. But the work that we expect from that global workforce will also go up the value chain as work that's kind of the lower end of the value chain, the more kind of highly repetitive compliance-oriented work will be somewhat impacted by AI and other automation tools. So I don't think it eliminates the need for -- in fact, we don't see it eliminating the need for offshoring. I think what we will do is continue to upskill our offshoring resources to come up the value chain in the work that they do.

Yes. Okay. That makes sense. And again, for everyone who's listening on this call, if you have any questions, want me to address anything with management here, please do send me an e-mail at [email protected]. Okay. I guess maybe we can move into just more broadly, like just the competitive environment. You talked about the overall accounting industry. We know it's the big 4, and then there's -- you obviously focus on the middle market. Are you seeing -- just talk about the competitive environment. Are you seeing maybe big 4 possibly encroach on your space in the middle market? And alternatively, are you moving up the chain, moving down the chain? Just help us think through the current competitive dynamics.

Let me just say this. The timing of the Marcum transaction could not have come at a more opportune time. The size and the scale that we now have allows us to go both upmarket and the investments that we're going to be able to make in things like AI and automation and offshoring allows us also to go a little bit down market, right? So we see the environment that we're in now with the size and the scale and the investments that we're making allows us to go upmarket into that middle market client and a little bit down market as well. Think about the down market opportunity, though, because one real kind of differentiator here is we keep talking about AI. We keep talking about the investments that are required to be made there. There's a very small number of firms that serve that middle market client that can actually afford to make those investments. Invest in the tools, invest in the people, invest in the training. And so I see over time, there's going to be a real separation between the firms that are on that path and are making those investments and are upskilling their workforce and those that simply can't afford to make those investments. And the value that we'll be able to bring to clients will be market changing. And so when you think about the large TAM in the middle market, we kind of squarely play in the middle. We see there's opportunity to go up to the upper end of that middle market, and we see the ability, if we choose to, to go down because the firms that are below us will not be able to make those investments. So we see it really as a great opportunity for us.

And I guess as we think about some of these tech investments that you're making and the automation, how would you characterize yourself versus the big 4, for example? Are you aligned? Are you making similar types of investments? Or are you doing more or less? What's your -- what...

It's hard to measure. It's really hard to measure. I'm sure that they are investing more dollars into this space than we are. But we don't really typically go head-to-head with the big 4. We typically go -- we call big 4 Tier 1. We're really kind of squarely Tier 2 firms. So if you look at number kind of 5 through 20, excluding the big 4, we're right squarely in that grouping. And I will tell you, Peter is a leading authority when there's industry conferences. He's usually the one that's on stage leading the way on these topics. We know because we're with our peers at these industry conferences, what they're doing, we feel really good about the amount that we're investing, our commitment to making those investments, how we're -- the talent that we've added to the team in these areas. I mentioned on our call, we now have -- and again, the size and scale has allowed us to do that. We now have a team of over 60 people or approximately 60 people kind of dedicated just to transformation and innovation, including things like AI and data governance and data extraction, new tools, kind of R&D around new tools that are in the market. The smaller firms can't do that. And most -- candidly, most of our peers don't have that level of resources and those dollars committed into those areas. So we feel really good about how we're positioned in our Tier 2 spot.

Yes. Yes. Okay. Okay. Makes sense. And then I do want to touch on -- you talked about one of your strategic priorities being attracting and retaining talent, how important sort of talent is in your sector. Maybe you can talk about some of your initiatives. I know the Marcum acquisition has likely helped there and provided you with a lot of talent. But talk a bit more about what you do -- what's new and different about, again, in terms of your retention and acquisition of talent?

Yes. So on the attraction side, and we'll talk about the retention side in a moment. But on the attraction side, just our new position, what we now, how we're now positioned in the market has allowed us to attract talent that we've never seen before. And one example, actually, a couple of examples are on Peter's transformation innovation team. We have the person that's leading AI, our AI initiatives came out of the big 4 was leading those initiatives. For the -- one of the big 4. The person that's leading data within that team came out of one of the big 4 was one of the leading people in data. Those people would not have joined a firm that is half the size. There's just not enough opportunity for them, right? So kind of across the board, the level of talent that we've been able to attract is already noticeable in many areas. The other thing that we're doing proactively is within each of these 12 industry groups that I talked about, each of those groups, industry groups and the leaders within those groups are charged with identifying their most highly regarded competitors within each of those industries. And we have a proactive outreach around talking about the organization that we now are, all the abilities that we can bring to the -- to not only them and the tools that we can bring to them, but the services we can bring to their clients. And we have a lot of interest and have already had some really terrific talent join our team just as a result of the platform we now have, how we're going to market, the investments that we're making in these areas and what a differentiator it is compared to other firms. So it's starting to take hold. Like I said, this is really kind of a second half, back half of '25 and what we've seen so far into '26, but very encouraged by what we're seeing there.

Yes. Yes. And then just, I guess, tying this point on the prior one together, to the extent you do go down market, what does that mean from a talent perspective? Like is there -- do you think there's enough sort of efficiencies in the system where you can do more with fewer people? Or does it mean maybe it means more acquisitions? Or like how do you really build out going down market? What's the cost?

Yes, I think -- I mentioned going both ways, right? So I think our focus is really continuing to go upmarket. But the question that I answered on the last one was really around when these investments in AI and automation and offshoring really take hold, if we are, in fact, seeing our ability to process far more cost effectively and efficiently, it will allow us to go down market. I will say when we go down market, it will still be squarely within the middle market, but it might be kind of going down from where we are now. I think the greater opportunity is to really kind of go upmarket into the middle market.

Okay. Interesting. Okay. I do want to just touch on some of the modeling points given that you just reported results a few -- just last week. And so look, I think we understand the incentive comp dynamic where there may be $60 million to $70 million of expenses, if you hit the high end of the revenue guide, but not on the low end. So perhaps we can hash out just the quarterly cadence of revenue growth and EBITDA. I think you said 1Q is likely to be low end of the revenue growth guide. So just starting with that, maybe talk about some of the factors that are driving that and what kind of builds that acceleration?

Yes. Let me give you a little bit of the pacing, and then I'll answer the question around kind of how it ramps up throughout the year. Pacing, we don't give quarterly guide, but just kind of for -- to create the parameters. Revenue -- think about revenue in the first half, so the first 2 quarters is about -- or 55%, about 45% in the second half. EBITDA -- adjusted EBITDA, about 70% in that first half, about 30% in the back half, right? So those are kind of pretty good parameters for how we expect that to fall out. As far as how the revenue will pace, we believe that it will ramp up over the year for the following reason, right? Why is it not kind of equal through the year? In Q1 and Q2, the first half of '25, we had some clients in certain of our practices that are -- that we've called. We know the profile of the client really didn't fit the profile that was a CBIZ profile. So we have that revenue in '25. We won't have the revenue in the second half of -- or the first half of '26. But we'll lap that, and we're obviously winning new logos all the time. And so that's when we expect the revenue to start to accelerate. The other factor that we have in '25 is, as you'll recall, we said we're not going to do any integration work that would interfere with client work through the first half. So that really came into the second half where we put people, we co-located them. We changed the software that they're using. We changed the workflow. There is inevitably some learning curve and some productivity loss as people adjust to those things. That really kind of comes in the second half of '25 and a little bit into '26. So those are the 2 things that are really kind of impacting the early part of '26 growth rates, but we expect that we'll lap that pretty quickly and then growth will ramp up through the year.

Okay. Okay. And just in terms of the productivity loss, I guess, are you confident that we're kind of past that phase now and we're ready to ramp? And really, as we -- it's really just the clients that you've called that are impacting the first half? Or do you think there's...

There will be some productivity impact in the -- in this quarter and kind of through April 15 because the teams are now kind of feeling the full weight of all of those changes during the busiest time of the year, right? So we still have team members that are learning new systems and working on new processes, right, doing work in a new way through this busy season. But we think -- well, we don't -- that will lap once we kind of get through this busy season, that's behind us and then we're -- that's behind us.

Yes. Okay. And then just if you could help us from the EBITDA side because as you said, you're expecting about 70% of the EBITDA in the first half, 30% in the second half. Usually, that first half EBITDA is a little bit higher. And so is that just a dynamic of revenue growth being a little bit lower, but maybe help us think through there might be an incentive comp dynamic because that first half EBITDA percentage seems a little bit lower than I would have thought...

If you take the normal -- and I would -- you're right on the incentive comp. But when we go back over the past couple of years, and we take out some anomalies that we know existed in those years, that's where we kind of get that 70-30 split up.

Okay. Okay. Understood. Okay. And then just on the cash flow side, like I think that was a nice positive surprise in terms of your cash flow guide. Maybe you can talk about some of the drivers of the improvement relative to 2025. And then sort of how to think about the sustainable level of cash flow conversion as we look ahead over the medium term?

Well, Daniel is sitting next to me, I could answer the question, but I'll turn it to Daniel, so he has a low airtime there.

Sure. Yes. So as we think about 2026 versus 2025, Faiza, there's really -- there's a couple of items that are causing or not causing, but creating that increase year-over-year. So one of them was we had some integration-related onetime items in 2025, I'll call them, that aren't going to recur in 2026. And then we also had, as you might have seen in our 10-K that we just released, a subsequent event in January, which was $50 million of cash that we ended up recouping from the final purchase price negotiation on the Marcum acquisition. So those 2 items are creating almost near $100 million of favorability year-over-year. But I would say on top of that, right, where we still have opportunity, not just in 2026, but even going forward is in our working capital, right? So we're working -- we're targeting our DSOs at a lower level. And then in 2026, we actually have a higher level of capital expense that is related to some of the facility integrations that we're doing. That is a headwind in 2026. But as we go on beyond 2027, we should get to more of a normalized CapEx level that will -- back to your question on sustaining the cash flow will help us get to that more normalized cash flow level.

Great. Great. And then just last topic I want to touch on. I know we're close to the end of the time is really just on capital allocation. And my question is just given where the stock is, I know that one of your priorities is deleveraging. You want to get back to a lower level of leverage. But how should we think about share buyback versus deleveraging? And then I do want to touch on M&A, but I'll let you answer the share buyback question first.

Yes, I'll turn it to Chris.

Thanks, Faiza, for the question. And I would think about capital allocation, it's really simultaneously taking advantage of some opportunistic share repurchase while still pursuing our longer-term leverage ratios. As always said, over time, less than 2.5x for a net leverage ratio is what we're moving towards. But I also think that will be balanced against just an opportunistic approach to share repurchase. And I think the free cash flow generation of the company is strong enough, where we can do that simultaneously.

Okay. And then I guess from an acquisition point of view, I know you've been very busy integrating Marcum. It's been a big project for everyone at the company. At what point do you think you're ready to do more acquisitions? I believe you said we shouldn't anticipate anything big, but how do you think about the M&A opportunity in the sector?

Yes. We would be very selective through 2026 on any acquisition opportunities. Just with where the stock is trading currently, we think the greater opportunities would be stock buybacks, certainly balancing against getting our debt down. But we are -- those we're in the people business and these people businesses don't come around again, right? So where we find a very strategic asset that can help with a very strategic imperative for CBIZ to accelerate growth or give us scale in a certain market, we would certainly look at something, but we wouldn't expect anything of scale or size really in '26. We would expect to resume going into '27 and beyond.

Yes. Yes. And Jerry, do you think just going back to the prior conversation around AI and efficiencies and you having the scale and ability to make those investments, like do you expect to be more acquisitive? And maybe, again, reflecting on your Marcum acquisition, like are there more bigger deals over time that you think would be beneficial for the company?

When you talk about something of the size of Marcum, I don't anticipate another deal of that size for at least the foreseeable future. I could see us in key markets. There are still some geographic markets that are very important to us. And we would -- obviously, scale is important, as I indicated in the space. So '27 and beyond, we would be very interested in a sizable platform in some key geographic markets. We would also be very interested in acquiring key strategic service lines. You mentioned cyber that was on that list. FP&A, data analytics, things around AI advisory would be very interesting to us. So we will continue to look for those types of business opportunities, tech, IT.

Yes. Yes. Okay. Excellent. Okay. Well, that's -- those were all the topics that I wanted to hit. I don't know if there's anything, Jerry, from your perspective, Peter, really anyone at CBIZ that you want to highlight that we didn't touch on?

I'd just always like to wrap up with -- if you look at CBIZ today and you look at us over a long period of time prior to this and where we're going today, I've really never been better positioned to continue to grow and to expand our margins and generate free cash flow. The size and scale that we have today, the breadth of services across our segment, our deep subject matter expertise, our deep industry expertise, the combination of those things are unmatched by any of our competitors. The size and scale that we now have allows us to make important and key strategic investments in things like AI and automation, offshoring, branding, technology, give our people the best tools in the industry. And the work that we did in '25 on the integration is kind of largely behind us. And so '26 kind of in the early part of '26, you'll see the growth that we talked about. But we think by midyear and beyond that, you'll start to see an accelerated growth platform, and we're excited about what the opportunity presents for us. So we thank you for the time today and appreciate you giving us the opportunity to share our CBIZ message.

Yes. No, thank you so much. Really appreciate you giving us the opportunity to have this session. And yes, thank you, and thank you to all the attendees for joining. Really appreciate it.

Thank you, Faiza. Thank you, everybody.