TriNet Group, Inc.

Good day, and welcome to TRINET's fourth quarter 2019 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Alex Bauer, Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome to Trinet's 2019 fourth quarter conference call. Joining me today are Burton M. Goldfield, our president and CEO, and Richard Beckert, our chief financial officer. Our prepared remarks were prerecorded. Burton will begin with an overview of our fourth quarter operating and financial performance. Richard will then review our financial results in more detail. We will then open up the call for the Q&A session. Before we begin, please note that today's discussion will include our 2020 first quarter and full year guidance and other statements that are not historical in nature, are predictive in nature, or depend upon or refer to future events or conditions Such as expectations, estimates, predictions, strategies, beliefs, or other statements that might be considered forward-looking. These forward-looking statements are based on management's current expectations and assumptions and are inherently subject to risks, uncertainties, and changes in circumstances that are difficult to predict and that may cause actual results to differ materially from statements being made today or in the future. Except as may be required by law, we do not undertake to update any of these statements in light of new information, future events, or otherwise. We encourage you to review our most recent public filings with the SEC including our 10-K and 10-Q filings for a more detailed discussion of the risks, uncertainties, and changes in circumstances that may affect our future results or the market price of our stock. Our discussion today will include non-GAAP financial measures, including our forward-looking guidance for non-GAAP net service revenues, adjusted EBITDA margin, and adjusted net income per share. For reconciliations of our non-GAAP financial measures to our GAAP financial results, please see our earnings release or our 10-K filing for our fourth quarter and full year 2019, respectively, both of which are available on our website or through the SEC website. A reconciliation of our non-GAAP forward-looking guidance to the most directly comparable GAAP measures is also available on our website. With that, I will turn the call over to Burton for his opening remarks.

Thank you, Alex. As I reflect on Trinet's 2019 fiscal year and fourth quarter performance, I am especially pleased with our Q4 sales, improved customer retention, and WSE growth. We delivered improved retention as a result of excellent execution by our customer services team. Customer satisfaction continues to be strong. We benefited from robust hiring within our installed base by servicing customers in our targeted verticals. Our fourth quarter financial results were in line with revised guidance. Looking forward, I am confident that we have taken the necessary steps to mitigate 2019's higher health costs. In the fourth quarter, we grew GAAP total revenues 11% year over year to $1 billion. This is the first time Trinet generated over a billion dollars in gap revenue in a quarter. I am excited for this significant milestone for our company, which highlights the distinct value of our offering in the marketplace. Net service revenues were flat year over year at $226 million. Professional service revenues grew 10% year-over-year to $137 million. During the fourth quarter, we grew insurance service revenues by 11% year-over-year to $881 million. Net insurance service revenues declined 12% year-over-year to $89 million for the quarter. Our Q4 gap earnings per share grew 70% year-over-year to 68 cents per share. Q4 adjusted net income per share grew 43% to 84 cents per share. For 2019, we grew GAAP total revenues 10% year-over-year to $3.9 billion, while net service revenues grew 4% year-over-year to $929 million. We grew gap earnings per share 13% year-over-year to $2.99 per share and we grew adjusted net income per share 10% to $3.33 per share. Finally, we finished the year with approximately 340,000 worksite employees. We believe our business has reached an inflection point. Our volume growth is now sustainable and giving us a strong tailwind for 2020 and beyond. Our approach to sustainable revenue growth is driven by improved sales productivity, improved retention, and Thank you for joining us. As I've already noted, our vertical strategy allows us to identify unique selling opportunities where we leverage our differentiated value and attract the right customers for the long term. In Trinet Life Sciences, we won the business of an innovative digital health startup. This company is solving the enormous problem of medication non-adherence by leveraging AI and data analytics. The customer is fast growing and was looking for a partner to help in their next phase of growth. They were attracted to Trinet for our competitive benefits offering, especially as they compete for talent in this tight labor market. By leveraging our technology platform, the company reduced manual processes and created operational efficiencies. Through their partnership with TriNet, they are now better positioned to grow successfully in pursuit of their large market opportunity. I am particularly proud of our focus on marketing. 2019 saw us make long-term investments in our brand, resulting in significantly improved unaided brand awareness. 2020 will see us leverage this improved brand recognition to drive further awareness and incremental lead generation. We are excited to see the impact of these efforts. As we continue to focus on new sales in 2020, we will place a strong emphasis on keeping all of our customers longer to ensure they are able to grow their business. A little over a year ago, we highlighted that we would be investing more on process improvements with special emphasis on enhancing the customer experience. This resulted Thank you for joining us today. that customers are staying longer with TriNet than they have in the past. We transformed our customer services team with both qualitative and quantitative analytics to better tailor our service models. As we look to 2020, we will continue our elevated spend on process improvement initiatives. The spend is focused on developing the modularity of our offering, automation, and creating further efficiencies. These investments should result in enhanced accessibility and improved customer interactions with TriNet. Additionally, our ability to quickly resolve the complex issues facing each of our different verticals should improve. Our investment should extend our customer relationships, enabling them to grow, evolve, and scale with TriNet. As previously noted, our investment in process improvements in 2019 had a quick payback in improved retention. The next phase of process improvements should have a similar return but play out over a longer timeframe. Turning to the economy, the United States finished 2019 with a 3.5% unemployment rate while adding nearly 2 million jobs throughout the year. Our customers are growing. We believe that by targeting the right business and organizations within our core verticals allows us to benefit from this strong labor market. As we execute our growth plan, we must continue to manage our costs so we can deliver the financial performance our shareholders expect. To address the elevated insurance costs we experienced in 2019, we took a number of actions as previously stated. We expect the 2020 performance of insurance costs as measured by net insurance margin to be in the 11 to 12% range. Given our recipe for growth, coupled with our cost management efforts, I believe TriNet is well positioned to deliver strong 2020 financial performance. I am pleased to announce that our Board of Directors has authorized an additional Thank you for joining us. Additionally, I would like to formally welcome Dr. Jacqueline Kosakoff and Sean Gurtin, who recently joined our Board of Directors. Both executives bring to our Board invaluable experience and insights, particularly within the healthcare and insurance spaces. We look forward to working closely with both of them. Finally, I would like to announce that Richard Beckert is transitioning from Trinet effective May 15th. We have engaged a global executive search firm and a formal process has commenced to recruit a replacement which will include both internal and external candidates. Richard will be with us through our first quarter earnings report and will assist us On behalf of the TriNet team, I would like to thank Richard for his partnership over the last three years. I will now turn the call over to Richard for a review of the financials.