TriNet Group, Inc.

Good morning and welcome to the TRINET third quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. 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, 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 third quarter conference call and webcast. 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 third quarter performance and discuss our progress on our strategy and medium-term outlook. Kelly will then review our Q3 financial performance in greater detail. Please note that today's discussion will include references to our 2025 full-year financial outlook. or medium-term outlook in 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 of our stock. In addition, our discussion today will include non-GAAP financial measures, including our forward-looking guidance for adjusted EBITDA 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 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. Mike?

Thank you, Alex, and good morning, everyone. We appreciate you joining us for the early start. Before discussing our third quarter results, I want to formally welcome Mala Murthy, who, as announced this morning, will become Trinet's Chief Financial Officer, effective November 28th, and I am sure is listening to the call this morning. Mala previously served as CFO of Teladoc Health and has more than 25 years of leadership experience, including business unit CFO for the global commercial segment at Amex and FP&A corporate strategy and treasury experience at PepsiCo. I'm excited to have her join at a pivotal time for Trinet as our results increasingly reflect a strengthened foundation and our focus is on generating sustainable growth. I know Mala looks forward to getting out and meeting you all over the coming months. I would also like to sincerely thank Kelly Tuminelli, our outgoing CFO, for her outstanding service and contributions to Trinet over the past five years. Kelly has played a vital role at Trinet during her tenure. She's been a consistent and reliable voice to shareholders and has been a great partner to me as I transitioned into the company. I'm grateful for all her efforts and for her willingness to stay on as an advisor to me through the middle of March next year, supporting a seamless transition. Thank you, Kelly. Now let's turn to the third quarter, which was a good one for Trinet. I'm pleased with our financial and operating performance, allowing us to adjust our full year earnings outlook upwards and towards the high end of our 2025 guidance range. In the quarter, we made progress on several dimensions of our strategy. While overall market conditions remain difficult with persistently low SMB hiring and elevated healthcare costs, in the areas we control, our execution is strong, our outlook is improving, and our confidence is growing as we work to reposition Trinet for long-term profitable growth. As a reminder, our medium-term strategy objectives include total revenues achieving a compounded annual growth rate of 4 to 6%, with our adjusted EBITDA margins expanding to 10 to 11%, which taken together will ultimately drive total annualized value creation of 13 to 15% through earnings growth supplemented by share repurchase and dividends. During the third quarter, revenues were in line with our plan, And with just a quarter left in the year, we expect full year 2025 total revenues to be approximately $5 billion, near the midpoint of our full year guide. Our disciplined pricing and better than expected ASO sales have contributed to revenues in line with plan despite a decline in WSE volumes. I recognize that while revenues being in line with plan is encouraging, investors will also have questions on underlying WSE volumes and when to expect a return to growth on this metric. Before talking through the components of volume growth, I'd like to make two points as context. First, we look at both the absolute number and the quality of WSEs in our client base. While volumes are down, we are quite pleased with the strong and increasing quality and profitability of our customers. Looking forward, we feel confident we have the high quality client base alongside other levers at our disposal to achieve value creation in line with our medium-term strategy. Second, our health plan pricing relative to the market is important context. Partly because we had our own issues to fix, we moved earlier to address the escalating cost trend, taking a view that might initially have been thought to be conservative. That is, that the escalated trend would not abate in the short term. We now believe this assumption of persistent escalated trend is playing out as the prudent view. Moving more quickly and aggressively with health fee increases, which proved to be in line with the general healthcare market, we believe put us ahead of some other PEO competitors. While this has clearly impacted our WSE volumes, we believe we are largely through the steepest part of the repricing and set up well for 2026. Based on what we are seeing in our new business pipeline and hearing from brokers, the pricing gap appears to be tightening. With those two points as context, let's look a little deeper into our 3Q volume performance through the three drivers, customer hiring, or CIE, retention, and new sales. Kelly will go into more detail on CIE later, but specific to the third quarter, we saw the normal exodus of summer seasonal workers in September. Even still, We are on track to see some overall improvement in CIE when compared with last year, albeit still at much lower levels than historical norms. On retention, while we remain on track to retain clients at or above our historical norm of 80%, we have seen a decline from prior year. It's worth noting that margins for terminated clients are considerably lower than for the overall client base. Further and looking at our client exit research it's clear that health plan pricing is the driver, as it was cited as the number one reason for termination up from being the fourth largest reason cited a year ago. Controlling for the impact of health plan pricing attrition was down year over year, and indeed we feel very good about our improving service delivery. More than a dozen years ago, we established the Net Promoter Score as our primary measure of success from our clients' perspective, and I'm happy to report that here in 2025, we've reached an all-time high in MPS. We believe there is a strong correlation between our investments and our service model and our strong MPS scores. On that front, we've recently announced the launch of our AI-powered suite of capabilities, which harnesses our extensive HR knowledge and delivers tailored output for our customers. The evolution of our service model continues, and AI will play a central role in this evolution. Turning to new sales, sales were down in the quarter, though we are encouraged by the quality of new clients added. Looking ahead to the fourth quarter, we expect improvement in our year-over-year performance, and we're excited about the January pipeline as well with strong contributions from the growth investments we've made. We continue to improve the retention of our senior, most productive reps and the median tenure of our team continues to improve. At the same time, we've revamped our recruiting and training programs and have restarted our hiring with more confidence these new reps will reach productive status. Our preferred broker program, which is comprised of four national partners, is currently in market. As a reminder, a feature of this program is the alignment of targets for new sales and retention. as well as building out dedicated quoting sales and service teams. This program is already generating a growing share of our RFPs, increasing our optimism for Q4 and 2026. We're also in market with our first set of benefit bundles, which seek to simplify the offering, streamline the sales process, and better align cost and plan design needs for our clients. It's increasingly clear that simplified benefit offerings will be an important part of our growth equation. So on revenue overall, we believe we are building the foundation for predictable and sustainable growth. On margins, we're making progress towards our 10 to 11% target. The two key levers for improving margins are getting back into our long-term insurance cost ratio range and managing operating expense growth. The third quarter saw us, again, realize health plan increases per enrolled member of approximately 10.5%. This is the cumulative increase after plan design buy downs, which clients use to manage fee increases and also has the effect of reducing risk to TriNet. Looking forward, we're increasingly confident in our ability to return the insurance cost ratio back below the top end of our long-term range of 87 to 90% in 2026. while also allowing for more moderate and predictable pricing for our client base. On operating expenses for the third straight quarter, we saw a year-over-year reduction, down 2% in 3Q. The drivers of this performance remain the same, the application of technology to our business processes and continued talent optimization. With our expenses and pricing levels well managed, free cash flow is improving. which enables us to return capital to shareholders consistent with our history. In the third quarter, we repurchased stock and paid dividends totaling $45 million. In conclusion, we have a high quality client base that is increasingly advocating for Trinet. We have a talented and engaged colleague base and an increasingly broad set of marketplace partners. We're making progress on our growth and margin expansion initiatives and delivering against our financial objectives. Momentum is clearly building here at Trinet. With that, let me pass the call to Kelly for her review of our financial performance.