TriNet Group, Inc.

Good afternoon and welcome to the Trinet First Quarter 2021 Earnings 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 2021 first quarter conference call. Joining me today are Burton M. Goldfield, our president and CEO, and Kelly Tuminelli, our chief financial officer. Our prepared remarks were prerecorded. Burton will begin with an overview of our first quarter operating performance. Kelly will then review our financial results. We will then open up the call for the Q&A session. Before we begin, please note that today's discussion will include our 2021 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. 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 for a 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, our 10-Q filing, or our 10-K filing for our first quarter of 2021 and full year of 2020 reconciliations, respectively, both of which are available on our website or through the SEC website. 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. The first quarter of 2021 saw a continuation of many of the positive trends that TriNet experienced throughout 2020. Our strong customer base showed resilience as well as significant growth in the first quarter of 2021. I am proud of the TriNet team and their ability to help our customers navigate the current economic climate. We continue to put our customers at the center of everything we do, and in the first quarter, we were again rewarded with strong operating and financial performance. During the first quarter, we grew GAAP total revenues 1% year-over-year to approximately $1.1 billion. I am especially pleased with this revenue growth as the year-over-year comparison was positive against the pre-pandemic quarter in 2020. Furthermore, this revenue growth was supported by our installed base of customers who have committed to TriNet at high retention rates and grew with us during the first quarter. Extrapolating off our Q1 trend and the continued reopening of the U.S. economy, I would expect continued outsized hiring in our install base throughout 2021. GAAP earnings per share grew 15% year-over-year to $1.51 per share. Our revenue growth, coupled with the reduced healthcare cost and expense management, drove our first quarter GAAP EPS growth. Finally, we finished the first quarter with approximately 326,000 WSEs down 3% year over year and down 2% sequentially versus the fourth quarter of 2020. These year over year and sequential metrics reflect lower churn than what we've seen in a typical January, but also lower contribution from new sales when compared to our pre-pandemic experience. We are increasingly optimistic as we look out on the balance of 2021. The lower churn or higher retention rate we saw in January was in part driven by our 2020 recovery credit program. In fact, we lost less than 1% of the customers who participated in the 2020 Recovery Credit Program. Furthermore, the strength and resilience of our customer base was key to our first quarter volume and business performance. Our customer base hired the most new employees during a first quarter in our 30-plus year company history. Putting together the hire retention with the strong customer hiring, three of our core verticals, technology, financial services, and life sciences, significantly outperformed our other verticals. This outperformance even includes absorbing an incremental percentage point of uncontrollable attrition from mergers and acquisitions, in our technology vertical. This increased M&A activity and technology reflects a vibrant industry already on the rebound. Turning to new sales during the quarter, we closed some of the sales gap from our pre-pandemic sales performance, but still have an opportunity for improvement. As inferred from our forward-looking guidance found in our earnings release, we expect new sales momentum to build during the year. As we look forward to the second quarter and the balance of 2021, we are encouraged by how the economic reopening and recovery has positively impacted TriNet. Although we do not guide to WSC count, I am confident in the growth of WSCs during the second quarter. We look forward to updating you as the year progresses. For nearly a decade, we targeted our sales and service efforts on our core verticals, including technology, financial services, professional services, life sciences, nonprofit, and Main Street. In doing so, we have built a group of dynamic customers who represent the innovative spirit of America's small and medium-sized businesses. We remain confident in the effectiveness of our vertical strategy. The true value of this customer base revealed itself during the pandemic. While we work tirelessly in service of our customers, our customers responded by continuing their relationship with TriNet while managing through the economic shock. Beginning in June of 2020, as the pandemic-related lockdown started to ease, our installed base began to hire workers, a trend that has continued unabated since that date. As noted, the first quarter of 2021 saw Trinet's customers hire the most new employees in any first quarter in Trinet's history. The value proposition remains particularly strong. Prior to the pandemic, our customers experienced fierce competition for talent. trying to provide them with an advantage through our differentiated service and benefits offering. As the economy improves throughout 2021 and business reopenings accelerate across America, we expect our installed base to leverage our solution while continuing to hire and compete for scarce talent. In the first quarter, the technology vertical was the hiring growth leader. We also experienced strong hiring from the financial services and life sciences verticals. The economic reopening and recovery has highlighted that TriNet is much more than a vendor to our customers. An example of this relationship is the creation of our 2020 Recovery Credit Program. This Recovery Credit Program is our effort to share with our customers the excess cost savings we generated from underutilized health services, primarily in April of 2020. Through the first quarter of 2021, we have accrued a total of $140 million for the 2020 Recovery Credit Program. Beginning in the fourth quarter of 2020, we have been busy returning these funds to our customers. In fact, in the first quarter, we returned $27 million to our customer base. As a result of the 2020 Recovery Credit Program, well over 50% of our installed base who have renewed with TriNet are now signed to annual contracts. This has the impact of stabilizing our installed base, increasing our predictability, and improving the renewal dialogue with our customers. During the first quarter, we again saw significantly lower health costs. As a result of this performance, we once again put all of our stakeholders first and established a new 2021 credit program. For this program, we accrued an incremental $25 million. The 2021 credit program is structured differently from our recovery credit program. It is our expectation that health costs will rebound over the course of 2021, which has already been captured in our forecast. As such, the amount of the 2021 credit program available to our customers will be contingent upon the full-year performance of our health costs. Kelly will provide more details later. Ultimately, we believe the primary long-term outcome for 2021 credit program and the 2020 recovery credit program will be measured by greater customer satisfaction and retention. Finally, as the economic reopening and recovery take hold, we expect new sales to continue to improve throughout 2021. As we previously noted, when the pandemic began and the lockdowns proliferated beginning in March of 2020, our new business growth dropped significantly from our pre-pandemic levels. our prospects became far more concerned with the front of their business versus the back office of their business or the survivability of their business rather than their HR services. In response, we had to change our approach to new sales as well as account for social distancing, which became the norm. As we reflect on our first quarter 2021 new sales performance, we finally saw the gap with our pre-pandemic performance begin to shrink. We continue to add customers in our core verticals as we highlighted how being with TriNet is so much more than a vendor relationship. And as we look forward to the rest of 2021, we expect to build new sales growth through the balance of the year as business activity re-accelerates. In summary, I am pleased with our financial performance. Our vertical strategy has once again become validated through the durability of the customer base and our customers' continued record hiring and growth in the first quarter. Our 2020 recovery credit program achieved an acceptance rate of well over 50% across the fourth quarter of 2020 and first quarter of 2021, contributing to retention and resulting in a more predictable customer base. New sales are recovering, but we still have opportunities for improvements. Consistent with the guidance outlined in our earnings release, we expect sales to improve throughout the year. Ultimately, Trinet has demonstrated its commitment to our customers throughout the pandemic and beyond, and we believe we can leverage that commitment to drive growth in the future. I will now turn the call over to Kelly for a review of our financial performance. Kelly?