TriNet Group, Inc.

Good day and welcome to the TRINET first quarter 2020 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 a touch-tone 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 with Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to TriNet's 2020 First Quarter Conference Call. Joining me today are Burton M. Goldfield, our President and CEO, Richard Beckert, our Chief Financial Officer, and Michael Murphy, our Chief Accounting Officer. Our prepared remarks were pre-recorded. Burton will begin with an overview of our first quarter operating and financial performance. Richard will then review our financial results in more detail. Finally, Michael will provide our forward-looking guidance. We will then open up the call for the Q&A session. Unique to this conference call, the four of us are in four different locations observing our COVID-19 shelter-in-place mandates. We will make our best efforts to have a Q&A session executed as seamlessly as possible. Before we begin, please note that today's discussion will include our 2020 second 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 our 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. Step-tests may be required by law and 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. In addition, 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. The impact from COVID-19 has led us to revise our forward-looking guidance. Our second quarter forward-looking guidance is especially impacted by COVID-19, leading to a wider than typical guidance range. For reconciliations of our non-GAAP financial measures to our GAAP financial results, please see our earnings release or our 10-Q filing for our first quarter, which is 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. Over the past two months, we have witnessed the immense consequences of COVID-19. Our thoughts are with those impacted by the virus, as well as those affected by the subsequent economic fallout. Trinet Q1 financial results were strong, driven by volume growth and disciplined financial management. Before I go into additional detail around these results, I want to address our market and our response to these unprecedented times. As a leader in the small and medium-sized business segment, we have spent the last two months guiding our 18,000-plus customers through this difficult time. We are providing invaluable consultation Feedback and Direction, in addition to our payroll, benefits, and HR support. At the same time, we are focused on our colleagues and all aspects of operating our business. SMBs are critical to the U.S. economy. They generate nearly half of the U.S. gross domestic product while employing the majority of the workforce. SMBs are the innovators employing 43% of all scientists and engineers, as well as the organizations that are providing 15% more patents than any other business segment. An example of one SMB innovator is Biodesics, a lung cancer diagnostics company. Biodesics is the first company to offer five non-invasive blood-based tests for patients with lung disease. Although virus detection has not been the focus of the company, the leaders of Biodesics felt compelled to leverage their technology and expertise to enter the fight against the corona pandemic. They are now testing for COVID-19 processing 1,000 test kits per day and providing results in 48 hours. I am proud that Biodesics is a Trina customer and just one of our many customers who have converted their technology and know-how to fight this pandemic. Our target market is these SMBs, which represent the backbone of our economy. Notably, small and medium-sized businesses will be the key to our nation's eventual economic recovery. I am pleased with the impact that TriNet has achieved in support of our customers and their valued employees. There has never been a more important time for us to leverage our expertise, reach, and scale in service of these amazing customers. TriNet's response with respect to the current pandemic began in mid-March as we instituted a shelter-in-place protocol. We focused our resources on guiding our SMB customers through the resulting economic dislocation and providing enhanced services. We quickly created and launched our CoVAD Trinet Business Resiliency and Preparedness Center. This web-enabled resource serves as an efficient distribution center for all Trinet COVID-19 communications and content. It allows our customers as well as our non-customer SMBs to access relevant and timely information. Over the past two weeks, we have seen on average just under a thousand daily visits to the site. Our seven by 24 customer service team has been crucial as it allows customers to reach out to us on their schedule to tap our expertise and resources. Since the beginning of April, the team has been logging on average of just under 500 COVID-19 related cases per day, roughly A 10% increase in our historic customer caseload. Two of the most frequent topics of inquiry have been assistance with the SBA loan applications and options around health care for their employees. The passage of the CARES Act and specifically the Payroll Protection Program administered through the SBA has been a key driver of customer inquiry. Our investment in infrastructure, and specifically workforce analytics, has paid off. It has enabled us to provide customers with timely and properly formatted payroll information necessary to complete the loan applications. Additionally, we are delivering the subsequent tracking of required payroll data under the terms of the PPP loans. We have also leveraged the COVID homepage to host a series of well-received how-to vignettes walking customers through the loan process. Thus far, just under half of our customers have accessed the relevant SBA loan data. As expected, customers have also been inquiring about options related to healthcare coverage. Trinet has proactively addressed this issue with improved access to affordable health care. We have actively communicated carrier plan changes such as waived copays and cost sharing, lab testing, telemedicine, and more to our customers. With respect to telemedicine, we have seen a doubling of visits without significant increases in wait times. We have also modified our sponsored plans to ensure we are best supporting furloughed WSEs and WSEs that have moved to part-time employment. Finally, we are facilitating access to short-term medical plans for furloughed and laid-off workers representing an affordable alternative to COBRA. With respect to TriNet Q1 financial results, I am pleased with our strong first quarter. These results reflect TriNet's return to growth coupled with disciplined financial management. Notwithstanding these Q1 results, the economic environment has changed, and as such, Richard will go through these results in greater detail. However, I do want to highlight two items from Q1. Our net insurance margin and our average worksite employee growth. Regarding net insurance margin, we delivered 14% in the first quarter largely due to health cost savings. We believe health cost savings will persist in the coming quarters due to the tradeoff between incremental COVID costs and lower costs attributable to the decline in elective procedures and overall health utilization. It is important to once again state that TRINET prices to risk. The health cost savings we saw in Q1 and expect to see in the coming quarters are a result of an unexpected drop in health utilization rather than higher than expected prices. Should we generate a net insurance margin in excess of our annual historical experience, when health utilization returns, we will look to return any cost savings to the TriNet installed customer base. Michael Murphy, who will be our acting CFO upon Richard's departure, will later provide greater detail regarding our net insurance margin forecast. Turning to WSE count, in the first quarter, average worksite employee count grew by 8%. That growth was largely the result of effective customer service and our customer selection process, which drove improved customer retention. Our customer selection process, and specifically our vertical focus, even during the current economic environment, continues to pay dividends. This focus is an important aspect of our business model and has resulted in our CIE metric having a lower correlation to changes in the U.S. unemployment rate. When compared with the broader SMB market, our installed base is overweight in attractive growth verticals such as technology, Financial Services, and Life Sciences. As such, our current WSE volume as of last week is in the range of 300 to 305,000 WSEs for a net attrition rate of 10% since March 31st. We typically don't provide an intra-quarter volume update, but given the current circumstances, we felt it prudent to provide This data this quarter. During this period, our Main Street vertical has had an attrition rate twice that of our white-collar verticals. Notably, the TriNet book of business is now nearly 80% in the white-collar vertical. To service these critical customers, TriNet moved decisively to protect and enhance our business. In mid-March, we executed our business continuity plan and transitioned our team to a work-from-home structure. Within one week, TriNet was serving over 18,000 customers remotely. We successfully transitioned 97% of our workforce of almost 3,000 colleagues to effectively working remote. This is an achievement I am personally very proud of. Thank you to the entire Trinet team for successfully working remote while continuing your passion around our amazing customers and company. Trinet established a cross-functional control tower to address the changing regulatory and customer landscape, as well as financial and operating constructs. In late March, we further strengthened our liquidity. Informed by our collective experience during the 2008 financial crisis, we felt it was prudent to maximize our already strong liquidity and draw down our revolving lines of credit. We now have over $700 million in cash available to us, strengthening our already strong balance sheet. Finally, we continue to prudently invest in our strategic initiatives such as developing the modularity of our offering, automation, and creating further efficiencies. In the long run, TriNet and our customers will benefit from these continued investments. TriNet's future is about attracting and retaining the right customers in our core verticals. A unique strategy in our industry that supported our momentum in the first quarter. Presently, our focus is on helping our customers navigate this complex economic and rapidly changing regulatory environment. We are united in our mission, which has never been more relevant, and we are playing a crucial role in helping our SMB customers survive COVID-19. With that, I will turn the call over to Richard for the financial review. Richard?