TriNet Group, Inc.

Good day and welcome to the Trinet Third Quarter 2020 Earnings 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. And I now would like to turn the conference over to Alex Bauer of Investor Relations. Please go ahead, sir.

Thank you, Operator. Good afternoon, everyone, and welcome to Trinet's 2020 Third Quarter Conference Call. Joining me today are Burton M. Goldfield, our President and CEO, Kelly Tuminelli, our Chief Financial Officer, immediately following the filing of our Third Quarter Form 10-Q, and Mike Murphy, our Interim Chief Financial Officer. Our prepared remarks were pre-recorded. Burton will begin with an overview of our Third Quarter operating performance. Mike will then provide a review of our Third Quarter financial results. Finally, Kelly will provide our forward-looking guidance. We'll then open up the call for the Q&A session. Before we begin, please note that today's discussion will include our 2020 fourth 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. 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. In addition, our discussion today will include non-GAAP financial measures, including our forward-looking guidance for net insurance margin, adjusted EBITDA margin, and adjusted net income per diluted share. 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 third quarter, which is available on our website or through the SEC website. With that, I will turn the call over to Burton for his review of our operating performance and market environment.

Burton? Thank you, Alex. I am extremely proud of Trinet's operating and financial performance during the third quarter. After navigating a difficult second quarter where we felt the full impact of COVID-19, we entered the third quarter resolved to make the best of a challenging operating environment. Our customer base, operating model, and prospecting processes were all disrupted and still face uncertainty. We are responding to this uncertainty by doing what we are passionate about, putting SMBs at the center of everything we do. Specific highlights since our last earnings report include we realized strong WSE volume in Q3 and growth in our volume over Q2. This compared favorably to the broader economic environment and our own forecast. We implemented the industry-leading recovery credit program and shared the program details with the first cohort of Trinet customers. It was greeted with widespread appreciation. And we hosted our first-ever conference focused on small and medium-sized business leaders, the Trinet PeopleForce Conference. In the face of COVID-19, we delivered strong financial performance due to a resilient customer base, which has been acquired through a verticalized go-to-market strategy and a unique business model that adds significant value across a wide range of strategic and operational issues facing small businesses in America. During the third quarter, GAAP total revenues increased 1% year over year, while GAAP earnings per share declined 38% year over year. Please note that our reported financial performance in the quarter includes a revenue accrual for our recovery credit program, which Mike will address later. The recovery credit program is our effort to share with our customers the excess cost savings we generated from underutilized health services, primarily in April. Historically, our business model has been to assume a deductible layer for the majority of our health plans. We are able to take this layer in part due to our strong balance sheet. Because of this plan construct, we had immediate access to the significant savings generated in April. Leveraging those savings, we created the Recovery Credit Program, our explicit effort to ensure a portion of these savings are used for the benefit of our customers, all within one year. Said another way, the Recovery Credit Program ensures that those customers who are committed to us and our partnership have access to the savings when they need them most. We believe the Recovery Credit Program represents the best usage of these savings. Through this program, we are investing in the success of our customers rather than choosing to subsidize new customers or set low expectations for ongoing health costs. Importantly, the first customer cohort received notice of their recovery credit during the third quarter. These are customers whose contracts renewed with us on October 1st. The preliminary response rates were very encouraging and indications for future retention are positive. We will be able to report on the full benefits of the program in 2021. Despite the ongoing economic uncertainty, our third quarter was distinguished by stable volumes. We ended the quarter with approximately 321,000 WSEs down 3% year over year, but up 2% sequentially versus the second quarter. Our acquisition of Little Bird HR accounted for approximately 1% of incremental WSE volume in the quarter. We attribute our volume outperformance to our amazing customer base and our unique approach to customer selection. The install base continues to be comprised of nearly 80% white-collar workers, which thus far have withstood the impact from the pandemic better than our blue-collar verticals. Continuing a trend we saw emerge in June, our white-collar verticals continue to add new employees throughout the third quarters. In fact, during the third quarter, our installed base hired more net new WSEs than they did in the same quarter last year. The hiring was consistent across all of our white collar verticals with technology being the leader. Additionally, the overall return of economic activity across the country positively impacted our installed base and served to mitigate the lack of additional PPP funding. New sales remain challenged during the third quarter relative to last year. We continue to close net new business in the quarter, however, at lower volumes than last year. Significantly, we have not yet returned to face-to-face sales calls. We are leveraging our install base for referral business. Our close rates are higher when prospects are referred by our current customer base. Last week, we hosted the first annual Trinet PeopleForce virtual conference. Trinet PeopleForce is our forum to provide SMBs with real insights, thought leadership, and recommendations for the challenges they face. Additionally, we highlighted the depth of the TriNet leadership team. This well-attended event allowed thousands of SMBs, which included TriNet customers and prospects, to participate in discussions around critical issues facing their companies with a diverse group of business experts, public officials, and thought leaders. These speakers included former President George W. Bush, former Attorney General Eric Holder, former White House Deputy Chief of Staff Mona Sutton, American pathogen preparedness expert Dr. Saira Madad, and current Trinic customers who are achieving amazing results, and so many others. Over a three-day period, Trinet PeopleForce tackled key challenges such as business resiliency, diversity, equity, and inclusion in the workplace, healthcare, including cost management and employee access, legislative updates and access to government programs and stimulus, and finally, an economic outlook for SMBs. Examples were given by speakers like Samantha Snaves around the challenges her company, Re3D, faces and Trinet's involvement in helping her company grow. I am pleased that Trinet can leverage our market position, which has been gained over a 30-year period, to provide this critical information for the benefit of our customers and the SMB community at large. The TriNet value proposition continues to resonate as demonstrated by events like TriNet PeopleForce. We are optimistic growth will return as the economic environment improves. Still, our outlook remains cautious until either a vaccine or improved therapies are generally available and economic confidence is restored or additional stimulus packages are approved, SMBs will face an uncertain fall and winter. Over the last two quarters, TriNet demonstrated its commitment to our customers by our enhanced service model, the Recovery Credit Program, and the TriNet PeopleForce Conference. For our customers and prospects, TriNet represents a comprehensive, differentiated solution that is so much more than payroll, HR software, or access to benefits. We are passionate about our customer success. Specifically, we are using Trinet Scale as one of the largest single employers in the United States to provide an always-on service model with instant access to information and support for small businesses. access to a wide variety of large group health and welfare plans not generally available to small businesses, and investments in technology that benefit SMBs currently and in the future. We believe this holistic approach, which is resonating in the market, will become even more valuable in the future as companies return to growth post-COVID-19. Finally, I would like to formally welcome Kelly Tuminelli to TriNet. Kelly was appointed as our Chief Financial Officer immediately following the filing of our third quarter Form 10-Q. Kelly brings significant experience and insights with her insurance background and tremendous leadership skills. Over the past six weeks, I have enjoyed working with her as together we drive Trinet's growth and success. Kelly's addition represents a further strengthening of our management team, and as such, I believe we are well positioned for growth as the economic environment improves. With that, I will pass the call over to Mike to provide a review of our third quarter financial performance. Mike?