TriNet Group, Inc.

Good day and welcome to the Trinet Group Inc. First Quarter 2025 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 telephone keypad. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Alex Bauer, Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning. My name is Alex Bauer, Trinet's Head of Investor Relations. Thank you for joining us, and welcome to Trinet's first quarter conference call. I'm joined today by our President and CEO, Mike Simons, and our CFO, Kelly Tuminelli. Before we begin, I would like to preview this morning's call. I will first pass the call to Mike, where he will comment on our first quarter performance and discuss our progress on our strategy and medium-term outlook. Kelly will then review our Q1 financial performance in greater detail. Please note that today's discussion will include our 2025 full-year financial outlook, our medium-term outlook, and other statements that are not historical in nature or 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. Our discussion today will include non-GAAP financial measures, including our forward-looking guidance for 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, 10-Q filings, or our 10-K filing, which are or will be available on our website or through the SEC website. With that, I will turn the call over to Mike.

Thank you, Alex. Our first quarter financial and operating performance once again highlighted the strength and durability of TriNet's business model. We delivered financial results that were in line with our expectations and that put us on a path to achieving our annual guidance. And that was in spite of an increasingly uncertain economic environment. As the quarter progressed, we saw a decline in SMB business confidence. This weaker business sentiment flowed through to Trinet in the form of low net customer hiring and as a contributing factor to lower new sales conversion rates. Despite the external challenges, I am encouraged by the resilience of our business model, evidenced by our strong customer retention, and I'm pleased with the accelerating pace of execution at Trinet, work that is positioning us for future success. For this call, I'll use our strategy, which we covered last quarter, to frame the discussion of our financial and operating performance. As a reminder, through the medium term, we intend to accelerate total revenues growth, achieving a compounded annual growth rate of 4 to 6 percent, expand our adjusted EBITDA margins to 10 to 11 percent, and ultimately drive total annualized value creation of 13 to 15 percent through EPS growth supplemented by share repurchases and dividends. Starting with revenues, for the first quarter growth was 1% and in line with our plan. We continue to expect revenue for full year 2025 to be in the range of $4.9 to $5.1 billion, with the key drivers being healthcare price increases and strong customer retention, with new sales growth expected to emerge later in the year. Mike Nygren, net customer hiring is expected to remain low throughout 2025 an assumption that seems increasingly likely, given the economic environment. Mike Nygren, i'm encouraged by the progress we're making with our benefit price increases our results to date, suggest we are effectively balancing repricing and cost ratio improvement. Mike Nygren, With a prudent focus on retention, all while supporting our customers in a challenging environment. Between our October 1, 24 and Jan 1, 25 renewals, we've renewed nearly two-thirds of our book since resetting our cost trend assumptions. Looking forward, our April 1 cohort has been successfully renewed and we're currently working with customers that renew on July 1. At this point, all our indicators suggest we are on track to achieve the planned rate increases while maintaining retention above our historical average. We are seeing the benefits of our strong service delivery and our investments in insurance talent and a more disciplined pricing process are paying off. Regarding new sales in the quarter, we're pleased with the customers we've added. This is a high quality cohort of customers with contracts priced appropriately to their risk and who stand to benefit from our strong offering, including our technology and service model. Pricing to our view of current insurance cost trends created a sales headwind versus a year ago, which when paired with a more uncertain macro environment led to lower sales conversion rates and new sales declining year over year. Absent a significant economic slowdown, I expect sales results to improve as we move through 2025 and continue executing on our strategic initiatives. We have a motivated sales team, and important deliverables lined up for our fall selling season. First, we expect to launch our first set of benefit plan bundles. As a reminder, our benefit plan bundles use our broad set of carrier partnerships paired with our proprietary data to create new plan bundles that meet customer needs for actuarial value and price while simplifying the offering and sales process. This product innovation is made possible by our differentiated operating model. Our combined scale and risk-taking provides us with a seat at the table with carriers and allows us to innovate in ways our increasingly tenured and productive sales force can leverage. Turning to our go-to-market approach, we're making progress towards scaling our benefits brokerage channel. This new channel approach is a comprehensive undertaking. Trinet is using our proprietary technology and redesigning a number of our processes in order to reduce friction and improve both the broker and the customer experience. We're pleased to have engaged several national insurance brokerages in a co-development effort. We believe Trinet's innovative benefit bundles will prove to be compelling for health and welfare brokers as they aim to provide their SMB customers with the best possible solutions delivered in a more simplified and streamlined way. Our progress in putting Trinet on a path to sustainable customer and revenue growth through new sales and retention goes beyond product and broker investment. We will continue to provide details in coming quarters on the meaningful milestones ahead, driving up rep tenure and productivity, as well as improving our customer experience. The final element of revenue growth is CIE, net hiring within our installed base and our first quarter result was largely in line with our muted expectations in some total revenues were up one percent in the quarter and absent severe economic disruption i believe a strong second half will set us up for accelerating revenue growth in 2026. we will have completed the most aggressive portion of our repricing and begun to reap the benefit of our distribution and product investments with growth accelerating towards our medium-term expectation of 4 to 6%. A second component of our strategy is margin expansion, and we're making progress on this dimension as well. Expenses in the quarter declined year over year. This is a meaningful achievement given we are concurrently investing in our strategic initiatives. Though we've got plenty of work ahead, I'm encouraged with our progress in constructing a scalable, high quality operating platform. Margin expansion over the medium term will also be supported by improvements in our insurance cost ratio. On that front, our first quarter performance was in line with our expectations. As I mentioned, price increases are taking hold and medical claims trends, though still elevated, have stabilized for several months now. As claim trends stabilize, we are increasingly confident with the adequacy of our pricing. As we exit 2025, we expect to have positive momentum returning to our long-term ICR range of 87 to 90%. Our margin performance in Q1 drove strong cash generation, and consistent with our strategy, we deployed capital for the benefit of our shareholders. We recently announced a 10% increase in our dividend and repurchase stock, taking advantage of the recent pullback and supported by our confidence in the momentum we're building as a company. I am pleased by the accelerating pace of execution and early successes across our portfolio of initiatives. We are positioning ourselves to launch new commercial initiatives in time for the fall selling season. We are controlling expenses while reinvesting in our business. and we're delivering exceptional service to our customers in a challenging business environment. Our decisions to narrow our focus to our core high value add HR solutions is bringing clarity and helping speed our decision making. At the same time, we recognize we are operating in a dynamic environment and may need to adapt and adjust staying focused on our customers and our medium term commitments. There's growing momentum at Trinet And I expect as the year progresses, shareholders will see our initiatives translate into positive commercial, operating, and financial outcomes. With that, let me pass the call to Kelly for her financial review.