TriNet Group, Inc.

Good day and welcome to the TRINET second quarter 2026 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 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 second quarter conference call and webcast. I'm joined today by our president and CEO, Mike Simonds, and our CFO, Mala Murthy. Before we begin, I would like to preview this morning's call. First, I will pass the call to Mike for his comments regarding our second quarter performance. Mala will then review our Q2 financial performance in greater detail and comment on our 2026 financial guidance and outlook. Please note that today's discussion will include our 2026 full-year financial 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 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 available on our website or through the SEC website. With that, I will turn the call over to Mike.

Mike? Thank you, Alex, and thank you all for joining us. At the midpoint of 2026, I'm pleased with the progress we've made on our priorities. We kept our focus on our customers and executing our strategy, resulting in higher retention, increasing sales momentum, prudent expense management, and improved earnings performance, positioning us to raise our full-year earnings outlook. While the operating environment remains challenging, the team is striking the right balance on two important fronts. First, as we previewed last quarter, our health fee pricing work over the previous 18 months positioned us to renew customers at rates more closely aligned with market trend going forward. We saw the benefit in Q2 with a balanced combination of insurance performance and significantly improved customer retention. Second, I'm encouraged by the balance we are achieving in continuing to invest meaningfully in growth and client service initiatives while also managing expenses prudently. Looking forward to the second half, we believe Trinet is well positioned for continued improvement in operating and financial performance. We've made good progress on our margins and operating fundamentals. We're now increasingly focused on realizing value from our growth-oriented investments. Trinet's path to sustainable growth will start with revenue growth as pricing outpaces a slowing rate of WSE volume decline. Then, WSE volumes will stabilize and begin to grow, driven by further improvements in retention paired with new sales increases. Starting with pricing, we now have our insurance cost ratio back in our targeted range and will continue to renew business assuming the elevated, high single-digit trend being felt across the market persisting. With our pricing more in line with market trend, our service proposition is becoming the biggest determinant as to whether our SMB clients stay with Trinet and continuing to improve our retention rates is our second key to reestablishing growth. Our primary KPI for customer service is the net promoter score, and I'm pleased to report that in Q2, we remained at much improved levels, continuing a trend from last quarter. Overall, attrition in the quarter improved by 36% year over year. Importantly, when we break this down to look at the drivers... We saw a 58% year-over-year decrease in attrition related to health fee pricing and a 47% year-over-year decrease in attrition related to service. We are encouraged by these improvements as our goal is to achieve and sustain long-term retention at rates several points higher than our historical experience of about 80%. Success, in our view, requires pairing our people with industry-leading technology. AI and HR is most valuable when combined with judgment rooted in deep domain expertise and a strong service orientation. Longstanding TriNet strengths. On this score, we're pleased with the performance of TriNet Assistant since its launch this spring. This AI capability is both delivering a strong improvement in our customer experience and freeing up capacity for our teams to focus on higher value work. Thus far, 50% of customer-initiated chat sessions have been addressed through TriNet Assistant, resulting in lower service case volumes for our colleagues. These chat sessions include benefits, payroll, and other workforce management-related inquiries. Moreover, customer satisfaction with TriNet Assistant is strong and highlights growing trust with the experience. TriNet Assistant is just one of several exciting AI projects designed to improve our customer experience Manage costs and fuel our growth. We'll share more as these initiatives move into production. A second important investment in our client experience is our acquisition of Cocoon. Leave of absence has been a significant compliance and employee experience pain point for our customers and the broader SMB market. And with Cocoon, we addressed it with a best-in-class solution. I'm pleased to report that our integration is on track. Our first cohort of customers has migrated to the solution. Our second and third cohorts are expected to be completed by year end, which leaves us prepared to onboard new PEO customers during our busiest time in January. The third ingredient in achieving sustainable growth is new sales. In the second quarter, sales ended flat year over year with sequential improvement through the quarter. The challenges we encountered in March persisted into April before abating. Sales momentum has returned, leaving us encouraged as we look forward. We outlined several initiatives at the start of the year designed to improve our distribution and further differentiate our benefits offering, and we've made meaningful progress on both fronts. First, we're doing a better job retaining our most experienced sales consultants. The total number of reps with more than four years of experience is up 7% year over year. As we've discussed, senior reps are our most productive, and we've seen that become even more true over time. The productivity of our senior reps improved by 13% year-over-year in Q2, and on average, they were five times more productive than our first-year reps. Retaining and growing our senior reps is critical. Over the next two years, we expect this group to grow further as successful Level 2 and 3 reps graduate into their ranks. We created our Ascend program to build a repeatable means of hiring, training, and retaining sales professionals, feeding a much higher percentage of them into our senior rep ranks than was the case through our historical approaches. Our first Ascend class of just over 20 reps moves into production in Q3, and as we have expanded our Ascend program nationally, over 100 new reps have been hired into the program. We expect Ascend cohorts to graduate quarterly into production throughout 2027 and form the primary means by which we build a strong culture and sustainable sales talent factory. During 2025, we slowed our traditional hiring as we built out the Ascend program. This resulted in an overall contraction of the sales force in the second half of 2025 and the first half of this year. With our new recruiting, selection, and training motions now rolling new reps into production, we expect to show year-over-year increases in total sales consultants in the current quarter, and we expect to see this growth continue, finishing the year with approximately 20% more sales consultants than we finished 2025. Like each element of our strategy, with our sales force, we focused on approaches that generate sustainable, long-term improvement. We are heading into our busiest selling season with a sales force that has more experienced reps and is growing in absolute numbers as well. A second element of our distribution strategy is our broker channel, which continues to demonstrate growth. This channel expands our distribution through national broker partnerships with incentives for new sales and retention. At the end of Q2, the broker channel represented 32% of new sales with RFPs up a robust 54% year over year. While this channel is more competitive than direct sales, we believe that deeper broker partnerships should result in more broker-generated leads aligned with our target customers. Retention-based incentives to brokers are critical for this alignment. Benefit brokers have deep expertise, and we know that benefits is a primary reason that our targeted clients come to the PEO business model. Trinet is uniquely positioned here given our national scale and ability to take and manage risk. As the fall selling season comes into focus, our insurance services team has introduced innovations to our health plan offering. First, we expanded our benefits plan library to cover a wider array of price points and then invested in AI to match client needs around coverage and cost with the appropriate set of bundled plan choices. These bundles will be in market for our fall selling season. Second, in July, we launched our enhanced health plan pricing engine, creating a more structured, responsive, and scalable pricing model. We believe the new health plan pricing engine will improve proposal quality, speed, and consistency, strengthening broker and seller confidence and leading to greater stability in pricing over time. The combination of benefits, investments, and added distributions underpin our confidence in growing sales through the second half of 2026. In summary, we believe we're progressing well against our growth plan. At mid-year, we are raising full-year earnings guidance. Our health plan pricing is better aligned with market trends, retention is improving, and our focus on customer service, including the cocoon integration and application of AI, is delivering results. We are retaining our senior reps, expanding the sales force as our first Ascend class joins the team, Entering the fall selling season with our benefits bundles and improved health plan pricing process. Our performance this year and our improved outlook reflects our disciplined execution and meaningful progress. Having completed much of the work required to stabilize the business, we are focused on driving returns from the growth investments we've made. As a final note, earlier this week we announced that Trinet was recognized by Time, Newsweek, and U.S. News & World Report as a top workplace. We have asked a lot of our colleagues over the last two years, and this sort of recognition reflects our colleagues' dedication and our continued focus on building a strong culture. I know many of our colleagues are listening to this call, and I want to thank all of them for all they're doing to deliver these strong results and build our growth story in a high-quality and sustainable way. With that, I'd like to turn things over to Mala. Mala?