CBIZ's second quarter of 2025 showed the accretive power of the Marcum acquisition, with revenue up 63% to $684 million, adjusted EBITDA up 128%, and adjusted EPS up 64% to $0.95 as margins expanded nearly 500 basis points year-to-date. Core recurring accounting, tax and benefits services stayed resilient, but a weak macro backdrop pressured discretionary, project-based work and, for the first time in years, client pushback held realized rate increases to about 4% - roughly 200-300 basis points below plan and an estimated $75 million full-year headwind. In response management accelerated revenue and cost initiatives, cut roughly 450 core FTEs, and guided revenue to the low end of its $2.8-$2.95 billion range while maintaining adjusted EBITDA and EPS guidance. Net leverage improved to 3.7x even after $71 million of share repurchases.
Good afternoon everyone and thank you for joining us for today's conference call to discuss CBIZ second quarter and first half 2025 results. As a reminder, this call is being webcast and a link to the live webcast along with today's press release and investor presentation can be found on the investor relations page of our website, cbiz.com. An archived replay and transcript will also be made available following the call. Before we begin, we would like to remind you that during the call management may discuss certain non-GAAP financial measures. Reconciliations of these measures can be found in the financial tables of today's press release and investor presentation. Today's call may also include forward-looking statements regarding our business, financial condition, results of operations, cash flows, strategies, and prospects.
Forward-looking statements represent only our expectations, estimates, and projections as of this date of this call and are not intended to give any assurance of future results because forward-looking statements relate to matters that have not yet occurred and these statements are inherently subject to risks and uncertainties. Many factors could cause future results to differ materially and CBIZ assumes no obligation to update these statements except as required by law. A more detailed description of such factors can be found in today's press release and in our financial filings with the Securities and Exchange Commission. Joining us for today's call are Jerry Grisko, President and Chief Executive Officer, and Brad Lakhia, Chief Financial Officer. I will now turn the call over to Jerry Grisko for his opening remarks, Jerry.
Thank you, Lori, and good afternoon, everyone. I'm pleased to report that our second quarter results reflect the resiliency of our core and recurring essential business, though the current economic climate continued to impact our more market sensitive areas today. In addition to talking about the second quarter and first half results, I'll address the proactive measures we are taking to drive revenue and control expenses in response to these market conditions, and I will also discuss why we think the Marcum acquisition is one of the most important and value creating strategic decisions in our history. I'll provide an update on integration and our continued excitement about the strength of our combined team and the opportunities ahead for accelerated growth and profitability.
Year to date, organic revenue for our core services within our benefits and insurance segment and our core accounting and tax services grew by low single digits, and our national practice segment grew by 13%. Likewise, year to date adjusted EBITDA more than doubled compared to last year, reflecting both the strength of our business model as well as the accretive nature of the Marcum acquisition. The second quarter business climate was largely unchanged from the first quarter, with continued uncertainty around tariffs, geopolitical unrest, and government funding cuts. Our middle market clients rely on us for essential services like our accounting, tax, benefits, and insurance in all economic environments, but they often wait for more stable conditions before investing in discretionary project based services. The first half of 2025 has been anything but stable and certain.
Our second quarter sentiment analysis, with responses from nearly 1,400 clients and client facing professionals, substantiated these trends. Nearly 60% expressed a neutral outlook, citing higher operational costs, mixed economic forecasts, and challenging tariff and trade policies as top concerns. As a result, overall revenue for the non recurring project based portions of our business, when excluding our SEC-related practice, is down low single digits year over year. Industry reports and discussions indicate that growth in these areas has been particularly challenging for our competitors as well. This year, for the first time in years, we're also seeing pressure on rate increases. Over the past several years we've achieved net rate increase in the mid to high single digits, and for the first six months we billed clients accordingly. However, in Q2 we saw increased client pushback, aligning with our survey data that clients are prioritizing cost controls.
Year to date our rate increase has averaged about 4%, which is 200 to 300 basis points below our expectations going into the year and is expected to create a headwind of about $75 million for the full year. Given the current and anticipated economic climate, we've accelerated several significant revenue and cost control initiatives. On revenue, each of our nearly 1,000 Managing Directors has been tasked with identifying new target clients, scheduling meetings to introduce our expanded services, conducting stewardship meetings with top clients, and participating in industry groups charged with pursuing top opportunities. On the cost side, we've expedited a number of integration-related decisions including workforce integration. With nearly 450 fewer full-time equivalent employees in our core businesses compared to last year, we're seeing enhanced team utilization and improved compensation expenses.
Looking ahead, we expect continued steady demand for our core recurring essential businesses to provide line of sight to the lower end of our revenue guidance even as non-recurring services face ongoing headwinds. We believe our revenue and cost initiatives will partially offset these pressures and support the achievement of our adjusted EBITDA and EPS guidance. Let me reiterate the strategic rationale for the Marcum transaction. We're even more excited about the strength of the team that joined us, the client fit, and the opportunities for growth and profitability neither firm could have achieved on their own. Marcum's business closely resembles CBIZ's legacy core in accounting and tax business. They serve middle market clients, maintain deep client relationships, achieve high retention rates, and generate strong cash flow.
They also share a successful track record of organic and inorganic growth and bring operational excellence and complementary capabilities in technology, industry practices, and offshoring. Marcum also strengthened our presence in key U.S. markets like New York, where we are now the largest accounting service provider outside the Big Four, as well as in New England, the Mid-Atlantic, South Florida, and Southern California. The acquisition expanded our client base and opened new cross serving opportunities to deliver an even broader array of services and depth of expertise to our combined clients. Our increased size and scale as the largest professional service advisor of our kind to middle market clients, including as the nation's seventh largest accounting firm, strengthens our position as an employer of choice for exceptional talent, allows us to pursue larger and more complex client engagements, enhancing our ability to reach total addressable market.
That extends to roughly 200,000 middle market U.S. businesses that collectively generate over $10 trillion in annual revenue and employ approximately 48 million people. It supports substantial investments in critical areas including AI and other advanced technologies, offshoring, automation, and branding, all while leveraging our collective infrastructure to expand margins and enhance profitability on integration. As previously shared, we delayed client facing changes during busy season, instead focusing on back office opportunities. That work is now in full swing and on schedule. Early results are positive, and when we have faced challenges, we've acted quickly with our primary focus being supporting our team and our clients. With that, I'll turn it over to Brad for some details.
Thank you, Jerry, and good afternoon, everyone. With two full quarters of the Marcum acquisition now reflected in our results, we're seeing the benefits of being stronger together. Our results reflect the benefits of greater scale, the resiliency of our business model, and the advantage of our unique breadth and depth of services, all of which is delivered by our exceptionally talented team on a consolidated basis. Second quarter revenue was $684 million, and first half revenue was $1.5 billion, a 63% and 66% increase, respectively, largely driven by the acquisition. For the quarter, adjusted EBITDA increased by 128% or $66 million and more than doubled to $356 million in the first half. Adjusted EBITDA margin was 17% in the quarter and 23% year to date, an increase of nearly 500 basis points versus last year.
Lower incentive compensation expense in the quarter and year to date contributed to approximately 400 and 300 basis points of margin improvement, respectively. In addition, in the face of uncertainty, we remain disciplined managing other discretionary spending. Normalizing for lower incentive compensation and discretionary expense items, we believe margin expansion was fairly consistent with our historical performance. As we begin to realize the benefits of greater scale and the accretive attributes of the acquisition, our annual target of 20 to 50 basis points of margin improvement remains intact. Second quarter adjusted diluted earnings per share increased by 64% to $0.95 per share, and first half adjusted diluted earnings per share increased by 47% to $3.26 per share. Second quarter interest expense was higher by $22 million compared to last year and $43 million higher year to date, driven by higher outstanding debt associated with the acquisition.
Second quarter tax expense was $7 million higher than last year, primarily due to the $30 million increase in pre-tax income. Our effective tax rate for the second quarter was lower by approximately 240 basis points compared to last year due to lower non-deductible expenses and lower state income tax expense. First half tax expense was $30 million higher than last year due to an increase of approximately $100 million in pre-tax income. Our first half effective tax rate was approximately 170 basis points higher, primarily due to lower tax benefits related to stock-based compensation. Turning to our financial services segment, second quarter revenue was $570 million, up $261 million or approximately 84%. Financial services adjusted EBITDA more than doubled to $111 million, a margin of 20%, 250 basis points higher than last year.
As expected, revenue growth was primarily driven by the acquisition and as Jerry highlighted, we continue to see meaningful growth in the financial services, core accounting and tax service lines which served to mitigate headwinds in our SEC-related practices and the relatively flat performance in our advisory business. In addition, year to date, the financial services segment has realized rate increases in the mid single digits which is approximately 200 to 300 basis points lower than what we expected coming into the year and also approximately 200 to 300 basis points lower than what we've realized over the past several years. Our Benefits and Insurance or B&I segment delivered revenue of $102 million in the second quarter, up nearly $5 million or approximately 5% compared to last year. B&I adjusted EBITDA was $20 million, up $3 million or 21%.
B&I adjusted EBITDA margin for the quarter was 20%, up 260 basis points compared to last year. The revenue and profitability improvements in B&I were driven by nearly all service lines and the team is engaging aggressively to pursue a strong pipeline of cross serving opportunities including those related to the acquisition. Turning to capital allocation and the balance sheet, our longer term capital allocation priorities remain unchanged. We will prioritize allocating free cash flow to fund high return organic and inorganic growth investments while opportunistically returning capital to shareholders. However, as we've discussed, our near term priority remains focused on deleveraging to 2.5 times or below on a 2026 exit rate basis. In addition, over the near term we will maintain a financially disciplined and prudent approach to minimizing the impact of the acquisition related shares and as an acquirer of choice, we will continue to pursue appropriate strategic opportunities.
Therefore, our path to deleveraging may not be linear. However, the strength of our business model and our ability to generate meaningful free cash flow provide us confidence when we can invest and achieve our target leverage simultaneously. Our net debt ended the quarter at approximately $1.6 billion, representing 3.7 times leverage or two times lower than the end of the first quarter. We ended the quarter with approximately $400 million of available liquidity under the revolver. In the second quarter we repurchased approximately 1 million shares at a value of approximately $71 million. As I mentioned on our first quarter call, on May 1, nearly 4.4 million shares became eligible for sale by our legacy Marcum Partners and we retain a contractual first right to purchase these shares.
Therefore, our second quarter repurchase activity reflects decisions we exercised under the contractual right and also reflects our commitment to the prudent, financially disciplined principles I mentioned earlier. Normalizing for the $71 million in share repurchases, our leverage would have ended at approximately 3.5 times, which is slightly better than our expectations. Turning to guidance, we are maintaining our revenue and earnings guidance. As Jerry discussed, we now expect the market conditions experienced in the first half to persist for the remainder of the year and therefore anticipate our revenue for the year to be at the low end of our guidance of $2.8 to $2.95 billion.
This compares to 2024 pro forma revenue of $2.79 billion reported in our 2024 10-K, which for our internal purposes we adjust downward by approximately $75 million for the items that we have previously described as known items, which include acquisition-related client conflicts, declines in the SEC-related business including SPAC-related revenue, and the impact of business divestitures. Our guidance and modeling support is included on page 21 of our investor presentation. Please note on page nine we have updated our estimated recurring and non-recurring revenue mix to now include our SEC practice and non-recurring. Given its market dependent attributes, we now estimate a recurring and non-recurring mix of 72% and 28% respectively. Finally, on page 20 we have included some new analysis summarizing the value of the cash tax benefit associated with the acquisition-related goodwill amortization. With that, I'll turn the call over to the operator for questions.