TriNet Group, Inc.

Good afternoon, and welcome to the Trinet fourth quarter and full year 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 your telephone keypad. 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 of Investor Relations. Please go ahead.

Thank you, Operator. Good afternoon, everyone, and welcome to Trident's 2020 Fourth Quarter Conference Call. Joining me today, Burton M. Goldfield, the President and CEO, and Kelly Tuminelli, the Chief Financial Officer. Our prepared remarks will be pre-recorded. Burton will begin with an overview of our Fourth Quarter Operating Room. Kelly will then review our financial results. We'll then open up the call for the Q&A session. Before we begin, please note that today's discussion will include our 2021 first quarter and full year guidance and other statements that are not historical in nature, 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. Certificates may be required by law and do not undertake to update any of these statements in light of new information, future events, or other laws. We encourage you to review our most recent public filings with the FCC, including our 10-K and 10-Q filings and many more. 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 of 2020, 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 or in our earnings release. With that, I will turn the call over to Burton for his opening remarks.

Thank you, Alex. 2020 proved to be the most challenging year of my professional career. It also proved to be a year where Trinet's mission and strategy were especially valued by our customers. We started 2020 by delivering strong financial performance and volume growth in the first quarter. Momentum in our business was strong. Everything changed with COVID-19 and the subsequent lockdowns. We rapidly adjusted to the new environment and leveraged our deep understanding of the verticals we serve. This knowledge allowed us to quickly address the issues faced by our customers during this very difficult time. Additionally, a unique program that Trinet created during COVID-19 was the Recovery Credit Program. 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. This program has been very well received and provided a significant benefit to our customer base. Our vertical strategy and customer selection process is intended to build a dynamic, growing customer base. Throughout the pandemic, we have been amazed by the inherent resiliency of our customers, who in aggregate actually grew their employee base during the second half of 2020. We highlighted this customer hiring during our Q3 earnings call, and this growth accelerated in the fourth quarter. Customer hiring has always been a key contributor to our financial model. Our fourth quarter financial performance reflected the contribution from customer hiring and underscored the overall success of our vertical go-to-market strategy. During the fourth quarter, we grew GAAP total revenues 4% year-over-year to $1.1 billion, while GAAP earnings per share declined 52% year-over-year to $0.32 per share. The decline in our fourth quarter GAAP EPS was in part due to our accrual for the Recovery Credit Program. For the full year, we grew GAAP total revenues 5% year-over-year to $4 billion, and we grew GAAP EPS 34% year-over-year to $3.99 per share. Finally, we finished the year with approximately 332,000 WSCs down 2% year-over-year. Sequentially, we grew WSE's 4% during the fourth quarter when compared to the third quarter of 2020. This remarkable fourth quarter growth is attributed to our efforts in service of our customers, the strength and durability of our customers' install base, and the economic support provided by the government. COVID introduced significant volatility in the economy and in the equity markets. Bolstered by the strength of our business model and customers, we took advantage of the volatility and repurchased $178 million in stock during 2020 at an average price of $53.85 per share. As we look back over the past year, we are pleased with our execution. We understand the importance of the continued evolution of our service model to increase the overall value to our customers in both good and challenging economic times. The recent rollout of our Connect360 service model demonstrates our commitment to always evolve and improve. Standing still with our products and services is not an option as we endeavor to enhance the delivered value of our solution to these amazing customers. Our approach in targeting specific industries through verticalization allows us to define new attributes to our product and service model that will benefit our customer base. Our focus is on the following industry verticals, technology, financial services, life sciences, professional services, nonprofit, and Main Street. These verticals are attractive partners because they are comprised of the most dynamic SMBs in the U.S. economy. Many of the SMBs within these industries combine strong growth prospects with operational complexity and a prioritization around an exceptional employee experience. For our customers and prospects, TriNet often proves to be a strong partner for solving their unique issues while offering an attractive benefits solution for their employees. By providing an exceptional bundled PEO solution, we deliver HR expertise, risk mitigation, payroll, and a differentiated benefits offering. This is all enabled through our industry-leading technology platform. When the COVID-19 pandemic hit and the economy stalled, Trinet quickly moved into action. We leveraged our team and our scale in service of our customers. We demonstrated that we are vested in their success. We weren't a vendor. We weren't a point solution. We were and remain a company that is uniquely positioned to help SMBs succeed based on the breadth and depth of our relationship. The two most important examples of how we leveraged our team and our scale for the benefit of our customers and SMBs alike were our COVID-19 microsite, a public single location where we provide our educational updates and outreach and our recovery credit program. With the onset of the pandemic, we quickly launched our COVID-19 Trinet Business and Preparedness Center, which can be found on our homepage and available to all. This site has functioned as an efficient outreach channel where we can provide critical information regarding the CARES Act and PPP loan and loan forgiveness information. And for our customers, we provide alternative healthcare solutions and guidance through the difficult employee-related choices that they face, such as layoffs versus furloughs. The site provides a broad range of information available to all. Behind the scenes, our customer service team is assisting our customers through any and all specific issues our customers must address in a timely fashion. In an effort to provide financial support during this difficult period, we created the unique recovery credit program. As the pandemic took hold, overall health utilization dropped even as incremental COVID-19 related costs increased. Due to the structure of our risk-based health plans, we realized significant excess cost savings and we had immediate access to those savings during the year. We responded quickly by creating the Recovery Credit Program to ensure a portion of these savings were used for the benefit of our customers. We believe it was important to get these dollars to our customers when they needed it most. We have demonstrated to our customers that we are an invaluable business partner delivering a level of service typically available only to much larger entities. To me, this defines a partnership where ultimately we play a vital role in helping them to pursue their vision and help them to succeed in rapidly changing business climates. Once our customer base stabilized after the second quarter, We saw these customers begin to hire at an incredible rate. These SMBs hired 68% more new employees in the second half of 2020 than they did in the second half of 2019. Further, even when layoffs in the second quarter and negative change in existing is included in the calculation, The outcome was net positive with respect to WSEs. Said another way, our customers actually grew in 2020 versus 2019. As you recently saw, we launched Connect360, our effort to further evolve and improve our customer experience. We know that 60% of our customers want to speak directly to a knowledgeable individual versed in the specific issue they needed resolved. 75% of our customers want to reduce the time it takes to get to resolution. Connect360 is designed to get our HR experts on the line with our customers faster. 2020 has demonstrated that we put our customers at the center of everything we do. As we beta tested the design of Connect360, we listened to our customers, we learned from them, and we continue to adjust our service model in accordance with their feedback. We are confident that this evolution of the customer experience will be a long-term positive innovation. Early in the fourth quarter, we again demonstrated our commitment to putting our customers at the center of everything we do by hosting our first annual TriNet PeopleForce Conference. Over a three-day period, TriNet PeopleForce tackled the 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 the small and medium businesses. In post-conference surveying, 98% of the attendees indicated that they would attend again next year. We are excited to build on the success of this first conference. As we look forward to 2021, we believe that we are well positioned for success, especially as the pandemic subsides. While it remains early in the recovery, we are encouraged by the ongoing distribution of vaccines, and we are optimistic that we will see a gradual improvement in business activity as the year progresses. Because of the unique circumstances brought on by the pandemic, I want to provide a bit more clarity on our sales efforts and on our installed base. As we noted through 2020, new sales were negatively impacted by the effects of the pandemic. For our field sales force, the quick transition to remote selling was a significant change. This is a team that aspires to be the trusted advisors to our prospects, and the face-to-face interaction had been an important part of the process. I look forward to the day when our team can spend quality time with the amazing SMBs that are TriNet prospects. For these prospects, The extraordinarily difficult operating environment led business owners to be far more concerned with the front of the house rather than the back of the house. If either one of these disruptions occurred in a single year, it would represent a significant headwind to new sales growth. Having both occur in 2020 created an unprecedented hurdle, which was difficult to mitigate. On the positive side, the PEO value proposition resonated strongly in 2020 with our customers, prospects, and the SMBs more broadly. We as an industry demonstrated to SMBs the scale available to them, not just as it relates to benefit pricing and payroll, but to critical consultation and HR support. As we look to 2021, I am encouraged by several aspects of our business. First, in the face of the pandemic, TriNet was there for our customers, and our efforts have only helped us deepen our relationships. We provided meaningful guidance to our customers during a highly uncertain period, and we created the Recovery Credit Program to help our customers when they needed it most. As we market to new prospects, we highlight that we are more than just a vendor, but the partner they can count on today and over the long term in all economic environments. Second, I believe we are seeing green shoots in the first quarter. Sales are still down when compared to 2020 However, January is indicating that the gap between new sales and our pre-pandemic experience is beginning to narrow. One vertical where we are seeing particular strength is technology. In fact, we are expecting new sales in the vertical to grow year over year in the first quarter even in the face of the continuing pandemic in 2021 versus a non-pandemic quarter in Q1 2020. The tech industry remains flush with capital, and we have started to see VCs redeploy that capital. Looking at our January tech sales according to our collected statistics, Over 50% of the new annual contract value in the tech vertical is being derived from companies who are either newly funded startups or early stage companies who have received an additional round of funding. This investment activity suggests a strong 2021 for the tech industry and our January performance highlights that we continue to build a dynamic, durable install base. Our team is focused and energized and we are working to deliver strong year-over-year new sales. I look forward to updating you on our first quarter progress in a couple of months. Through our disciplined approach to customer selection, best displayed by our vertical strategy, Our installed base has weathered the pandemic far better than we could have expected. We are more committed than ever to serving this installed base while growing it further throughout 2021. With that, let me pass the call over to Kelly to discuss our financial results. Kelly?