Now I would like to turn the call over to the Chief Financial Officer of BBSI, Mr. Jim Miller. Sir, please go ahead.
Thank you, George and depending upon where you are dialing in from, good morning or afternoon, everyone. As you saw at the close of the market yesterday, we issued a press release announcing our financial results for the second quarter ended June 30, 2012. The 35% increase in gross revenues represents our tenth consecutive quarter of year-over-year double-digit sales growth and is also an all-time quarterly revenue record for us.
We attribute these results in parts to building with within our organization and a robust performance of our three sales channels, customer referrals, referral networks and internal sales staff.
Results are also attributed to the returns we’re realizing from our investment back in the organization which are supporting this continued pipeline growth and rewarding execution in this field. While we continue to mature our product offering, organizational culture and brand offering to our client base, we are seeing continued strength in our pipeline of new client additions while also maintaining very strong client retention.
I would like to mention that yesterday’s earnings release summarizes our revenues and cost of revenues on a net revenue basis as required by Generally Accepted Accounting Principles or GAAP. Most of our comments today, however will based on gross revenues and various relationships, pure gross revenues because we believe such information is, one, more informative as to the level of our business activities, two, more useful in managing and analyzing our operations and three, add more transparency to the trends within our business. Comments related to gross revenues is compared to net revenue basis of reporting, have no effect on gross margin dollars, SG&A expenses or net income.
Now turning to the second quarter results, as I mentioned, total gross revenues increased 35% to $494 million over the second quarter of 2011. California, which comprised approximately 86% of our overall second quarter gross revenues, increased 39% due to considerable growth in PEO business.