TriNet’s Q3 2024 Results: Strong Retention Despite Profit Challenges

TriNet, a leading provider of HR solutions for SMBs, reported its Q3 2024 financial results. Total revenues grew by 1%, reaching $1.2 billion, while net income declined to $45 million from $94 million year-over-year, reflecting increased healthcare costs. Adjusted net income per diluted share fell to $1.17. The average number of worksite employees increased by 7% to 356,000. Despite the challenges, TriNet’s CEO highlighted the company’s ability to realign pricing in response to healthcare trends, driving strong customer retention. Looking ahead, TriNet anticipates Q4 revenue growth of 1% to 2% and solidifies its position with robust cash reserves and targeted adjustments.

DUBLIN, Calif., Oct. 25, 2024 — TriNet Group, Inc. (NYSE: TNET), a leading provider of comprehensive human resources solutions for small and medium-size businesses, today announced financial results for the third quarter ended September 30, 2024. The third quarter highlights below include non-GAAP financial measures which are reconciled later in this release.

Third quarter highlights include:

• Total revenues increased 1% to $1.2 billion as compared to the same period last year.
• Flat professional service revenues of $184 million as compared to the same period last year.
• Net income was $45 million, or $0.89 per diluted share, compared to net income of $94 million, or $1.63 per diluted share, in the same period last year.
• Adjusted Net Income was $59 million, or $1.17 per diluted share, compared to Adjusted Net Income of $109 million, or $1.91 per diluted share, in the same period last year.
• Adjusted EBITDA was $109 million, compared to Adjusted EBITDA of $172 million, in the same period last year.
• Average WSEs increased 7% as compared to the same period last year, to approximately 356,000 and includes approximately 20,000 PEO Platform Users.
• Average HRIS Users for the period was approximately 183,000.
• At September 30, 2024, TriNet had unrestricted cash and cash equivalents of $251 million, unrestricted investments of $195 million and total debt of $1.1 billion.

“Small businesses are navigating a challenging business climate, hiring very carefully, and dealing with healthcare cost inflation steeper than we have seen in several years,” said Mike Simonds, TriNet’s President and CEO. “TriNet is not immune from these conditions and higher healthcare costs adversely impacted our profitability in the quarter.”

Mr. Simonds continued, “Fortunately, our model allows us to quickly take action and align our pricing with healthcare cost trends. We repriced our largest cohort of healthcare fees on October 1, and we experienced strong customer retention. Following our January 1 renewal, we will have priced for the current elevated cost trends across more than two thirds of our PEO business. Our colleagues are extremely engaged, delivering strong service to our customers and record retention levels in 2024 despite the challenging environment. Nearly eight months into this role, I am excited by the opportunity in front of us to grow our business profitably in an increasingly focused, disciplined, and customer-centric fashion.”

Fourth Quarter and Full-Year 2024 Guidance

In addition to announcing our third quarter 2024 results, we provide our fourth quarter and full-year 2024 guidance. Non-GAAP financial measures are reconciled later in this release. Percentages reflect the increase or (decrease) from the prior year quarter and prior year end.

Quarterly Report on Form 10-Q

We anticipate filing our Quarterly Report on Form 10-Q (“Form 10-Q”) for the nine months ended September 30, 2024 with the U.S. Securities and Exchange Commission (SEC) and making it available at http://www.trinet.com today, October 25, 2024. This press release should be read in conjunction with the Form 10-Q and the related Notes to Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Form 10-Q.

Earnings Conference Call and Audio Webcast

TriNet will host a conference call at 5:30 a.m. PT (8:30 a.m. ET) today to discuss its third quarter results for 2024 and provide fourth quarter and full-year financial guidance for 2024. TriNet encourages participants to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. To pre-register, go to: https://dpregister.com/sreg/10193255/fda58bcb7d. For those who would like to join the call but have not pre-registered, they can do so by dialing +1 (412) 317-5426 and requesting the “TriNet Conference Call.” The live webcast of the conference call can be accessed on the Investor Relations section of TriNet’s website at http://investor.trinet.com. Participants can pre-register for the webcast by going to: https://events.q4inc.com/attendee/366545303 A replay of the webcast will be available on this website for approximately one year. A telephonic replay will be available for two weeks following the conference call at +1 (412) 317-0088 conference ID: 1675204.

About TriNet

TriNet provides small and medium-size businesses (SMBs) with full-service industry-specific HR solutions, providing both professional employer organization (PEO) and human resources information system (HRIS) services. TriNet offers access to human capital expertise, benefits, risk mitigation, compliance, payroll, and R&D tax credit services, all enabled by industry-leading technology. TriNet’s suite of products also includes services and software-based solutions to help streamline workflows by connecting HR, benefits, employee engagement, payroll and time & attendance. Rooted in more than 30 years of supporting entrepreneurs and adapting to the ever-changing modern workplace, TriNet empowers SMBs to focus on what matters most – growing their business and enabling their people For more information, please visit TriNet.com or follow us on Facebook, LinkedIn and Instagram.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to TriNet’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section titled “Non-GAAP Financial Measures.”

Forward-Looking Statements

This press release contains, and statements made during the above referenced conference call will contain, statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among other things, TriNet’s expectations and assumptions regarding: TriNet’s financial guidance for the fourth quarter and full-year 2024 and the underlying assumptions, the value to customers and shareholders of TriNet’s product offerings, TriNet’s financial performance and long-term growth, and the extent, length and growth impact of current economic uncertainty. Forward-looking statements are often identified by the use of words such as, but not limited to, “ability,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “guidance,” “impact,” “intend,” “may,” “plan,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “value,” “will,” “would” and similar expressions or variations. Examples of forward-looking statements include, among others, TriNet’s expectations regarding our ability to continue to have our value proposition resonate at required pricing levels; ability to manage our expenses diligently; and our ability to meet our forecasted retention goals. These statements are not guarantees of future performance but are based on management’s expectations as of the date hereof and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from our current expectations and any past or future results, performance or achievements. Investors are cautioned not to place undue reliance upon any forward-looking statements.

Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: our ability to manage unexpected changes in workers’ compensation and health insurance claims and costs by WSEs; our ability to mitigate the unique business risks we face as a co-employer; the effects of volatility in the financial and economic environment on the businesses that make up our client base; loss of clients for reasons beyond our control and the short-term contracts we typically use with our clients; the impact of regional or industry-specific economic and health factors on our operations; the impact of failures or limitations in the business systems and centers we rely upon; the impact of discontinuing our discretionary credits on our business and client loyalty and retention; changes in our insurance coverage or our relationships with key insurance carriers; our ability to improve our services and technology to satisfy client and regulatory expectations; our ability to effectively integrate businesses we have acquired or may acquire in the future; our ability to effectively manage and improve our operational effectiveness and resiliency; our ability to attract and retain qualified personnel; the effects of increased competition and our ability to compete effectively; the impact on our business of cyber-attacks, breaches, disclosures and other data-related incidents; our ability to protect against and remediate cyber-attacks, breaches, disclosures and other data-related incidents, whether intentional or inadvertent and whether attributable to us or our service providers; our ability to comply with evolving data privacy and security laws; our ability to manage changes in, uncertainty regarding, or adverse application of the complex laws and regulations that govern our business; changing laws and regulations governing health insurance and employee benefits; our ability to be recognized as an employer of worksite employees and for our benefits plans to satisfy all requirements under federal and state regulations; changes in the laws and regulations that govern what it means to be an employer, employee or independent contractor; the impact of new and changing laws regarding remote work; our ability to comply with the licensing requirements that govern our solutions; the outcome of existing and future legal and tax proceedings; fluctuation in our results of operations and stock price due to factors outside of our control; our ability to comply with the restrictions of our credit facility and meet our debt obligations; and the impact of concentrated ownership in our stock by Atairos and other large stockholders; and our ability to manage risks associated with our international operations. Any of these factors could cause our actual results to differ materially from our anticipated results.

Further information on risks that could affect TriNet’s results is included in our filings with the SEC, including under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on our investor relations website at http://investor.trinet.com and on the SEC website at www.sec.gov. Copies of these filings are also available by contacting TriNet Corporation’s Investor Relations Department at (510) 875-7201. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements in this press release, and any forward-looking statements in this press release speak only as of the date of this press release. In addition, we do not assume any obligation, and do not intend, to update any of our forward-looking statements, except as required by law.