Q2 2024 TriNet Group Inc Earnings Call
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Speaker Change: Copyright © 1985, New Thinking Allowed Foundation
Operator: Good day and welcome to TriNet's second quarter 2024 earnings conference call. All participants will be in the synonym mode. To do you need assistance, please signal conference specialists by pressing the star key followed by zero.
Operator: Good day and welcome to the TriNet Second Quarter 2024 Earnings Conference. All participants will be in the Sonoma. Should you need assistance... Please signal conference specialists by pressing the star key followed by, After today's presentation, there will be an opportunity to ask questions. If you have a question, you may press star then 1 on your telephone. To withdraw your question, please press star.
Speaker Change: Good day and welcome to the TriNet Second Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode.
Speaker Change: Should you need assistance, please contact a conference specialist by pressing the star key followed by zero.
Operator: 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 draw your question, please press star, then two. Please note, this event is being recorded.
Speaker Change: After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star, then 1 on your telephone keypad.
Operator: Please note, this event is being recorded. And now I'd like to turn the conference over to Alex Bauer, Investor Relations. Please go ahead.
Speaker Change: To withdraw your question, please press star then 2. Please note, this event is being recorded.
Alex Bauer: Oh, now let's try to cover its over to Alex Bauer and best of relations.
Alex Bauer: Please go ahead. Thank you, operator.
Speaker Change: I would now like to turn the conference over to Alex Bauer, Investor Relations. Please go ahead.
Alex Bauer: Thank you, Operator. Good morning, and thank you for joining us for TriNet's 2024 Second Quarter Earnings Conference Call. I'm Alex Bauer, and I am TriNet's Head of Investor Relations. I'm joined today by our President and CEO, Mike Simonds, and our CFO, Kelly Tuminelli.
Alex Bauer: Good morning, and thank you for joining us for TriNet's 2024 second quarter earnings conference call. I'm Alex Bauer, and I am TriNet's head of investor relations. I'm joined today by our President and CEO Mike Simonds and our CFO Kelly Tuminelli.
Alex Bauer: Thank you, Operator. Good morning, and thank you for joining us for TriNet's 2024 Second Quarter Earnings Conference Call.
Speaker Change: I'm Alex Bauer, and I am TriNet's Head of Investor Relations.
Speaker Change: I'm joined today by our President and CEO , Mike Simonds, and our CFO , Kelly Tuminelli.
Alex Bauer: Before we begin, I would like to address our use of forward-looking statements and non-GAAP financial measures. Please note that today's discussion will include our 2024 third quarter and full year financial outlook 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 those 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.
Alex Bauer: Before we begin, I would like to address our use of forward-looking statements in non-GAAP financial measures. Please note that today's discussion will include our 2024 third quarter in full year financial outlook and other statements that are not historical in nature. Our 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 and 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.
Speaker Change: Before we begin, I would like to address our use of forward-looking statements and non-GAAP financial measures.
Speaker Change: Please note that today's discussion will include our 2024 third quarter and full year financial outlook and other statements that are not historical in nature, are predictive in nature, or depend upon or refer to future events or conditions.
Speaker Change: such as our expectations, estimates, predictions, strategies, beliefs, or other statements that might be considered forward-looking.
Speaker Change: 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.
Alex Bauer: 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.
Speaker Change: 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.
Alex Bauer: 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 and certainties 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 net income per diluted share. For reconciliation of our non-GAAP financial measures to our GAAP financial results, please see our earnings release, 10-Q filings, or 10-K filings, which are all available on our website or through the SEC website.
Alex Bauer: 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 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 all available on our website or through the SEC website. With that, I will turn the call over to Mike. Mike?
Speaker Change: 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.
Speaker Change: In addition, our discussion today will include non-GAAP financial measures, including our forward-looking guidance for adjusted net income per diluted share.
Speaker Change: 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 all available on our website or through the SEC website.
Alex Bauer: With that, I will turn the call over to Mike.
Mike Simonds: Mike? Thank you, Alex, and thank you everyone for joining us. I am pleased to share that trying to deliver it a strong second quarter with a number of positive factors contributing to our results. This morning, I will share my thoughts on our financial and operating performance, as well as provide some additional observations regarding trying it and the growth opportunity ahead of us now five months into my role. Starting with the market context, the environment for small and mid-sized businesses remains challenged. SMBs continue to navigate high interest rates, softening end markets, and persistent high health care cost and fleet.
Mike Simonds: Thank you, Alex, and thank you, everyone, for joining us. I am pleased to share that TriNet delivered a strong second quarter with a number of positive factors contributing to our results. This morning, I'll share my thoughts on our financial and operating performance, as well as provide some additional observations regarding TriNet and the growth opportunity ahead of us, now five months into my role. Starting with the market context, the environment for small and mid-sized businesses remains challenging.
Speaker Change: With that, I will turn the call over to Mike. Mike?
Mike Simonds: Thank you, Alex, and thank you everyone for joining us. I am pleased to share that TriNet delivered a strong second quarter with a number of positive factors contributing to our results.
Mike Simonds: This morning, I'll share my thoughts on our financial and operating performance, as well as provide some additional observations regarding TriNet and the growth opportunity ahead of us now five months into my role.
Mike Simonds: Starting with the market context, the environment for small and mid-sized businesses remains challenged.
Mike Simonds: SMBs continue to navigate high interest rates, softening end markets, and persistent high health care cost inflation. They're hiring new people, but doing so cautiously. They're working very hard to retain their existing talent, avoiding the costs associated with turnover, and they're seeking to drive productivity. In short, they're signaling more clearly than ever that their people matter.
Mike Simonds: SMBs continue to navigate high interest rates, softening end markets, and persistent high health care cost inflation.
Mike Simonds: They're hiring new people, but doing so cautiously. They're working very hard to retain their existing talent, avoiding the costs associated with turnover, and they're seeking to drive productivity. In short, they're signaling more clearly than ever that their people matter.
Mike Simonds: They're hiring new people, but doing so cautiously.
Mike Simonds: They're working very hard to retain their existing talent, avoiding the costs associated with turnover, and they're seeking to drive productivity.
Mike Simonds: In short, they're signaling more clearly than ever that their people matter.
Mike Simonds: And while on the topic of people, I do want to pause and recognize the thousands of my colleagues at TriNet who put our customers at the center of everything they do, helping us create exceptional value for SMBs while delivering strong performance for our shareholders. Thanks to their efforts, we made progress in the quarter against our intermediate-term goal of exceeding the volume lost from attrition with the gains from new sales. Our marketing team strengthened the top of our funnel through targeted campaigns highlighting our compelling value proposition, which includes outstanding customer service, access to high-quality benefits, and real cost savings derived from our bundled approach.
Mike Simonds: And while on the topic of people, I do want to pause and recognize the thousands of my colleagues at TriNet who put our customers at the center of everything they do, helping us create exceptional value for SMBs while delivering strong performance for our shareholders. Thanks to their efforts, we made progress in the quarter against our intermediate term goal of exceeding the volume lost from attrition with the gains from new sales. Our marketing teams strengthened the top of our funnel through targeted campaigns highlighting our compelling value proposition. A value proposition which includes outstanding customer service, access to high quality benefits, and real cost savings derived from our bundled approach.
Speaker Change: And while on the topic of people, I do want to pause and recognize the thousands of my colleagues at TriNet who put our customers at the center of everything they do, helping us create exceptional value for SMBs while delivering strong performance for our shareholders.
Speaker Change: Thanks to their efforts, we made progress in the quarter against our intermediate term goal of exceeding the volume lost from attrition with the gains from new sales.
Speaker Change: Our marketing team strengthened the top of our funnel through targeted campaigns highlighting our compelling value proposition.
Speaker Change: A value proposition which includes outstanding customer service, access to high quality benefits, and real cost savings derived from our bundled approach.
Mike Simonds: Our sales team pursued those leads and delivered a good quarter, with our sales roughly in line with a strong prior year and up 30% through the first half of 2024. Given our sizable market opportunity and the strength of our offering, we continue to further invest in our field team. We finished the second quarter with 15% more reps year-over-year, and we expect to grow the distribution team further, approaching 20% year-over-year growth before heading into our fall selling season. And, as we grow our sales team, we are increasingly investing in their productivity, looking to retain and develop the very best in the industry.
Mike Simonds: Our sales team pursued those leads and delivered a good quarter with their sales roughly in line with a strong prior year and up 30% through the first half of 2024. Given our sizeable market opportunity and the strength of our offering, we continue to further invest in our field teams. We finished the second quarter with 15% more reps year over year, and we expect to grow the distribution team further, approaching 20% year over year growth before heading into our fall selling season. And as we grow our sales team, we are increasingly investing in their productivity, looking to retain and develop the very best in the industry.
Speaker Change: Our sales team pursued those leads and delivered a good quarter with our sales roughly in line with a strong prior year and up 30% through the first half of 2024.
Speaker Change: Given our sizable market opportunity and the strength of our offering, we continue to further invest in our field teams.
Speaker Change: We finished the second quarter with 15% more reps year-over-year, and we expect to grow the distribution team further, approaching 20% year-over-year growth before heading into our fall selling season.
Speaker Change: And, as we grow our sales team, we are increasingly investing in their productivity, looking to retain and develop the very best in the industry.
Mike Simonds: For our services team, the ultimate performance measure is whether our customers stay with us for longer, and on this measure, our team is performing exceptionally well. Customers are benefiting from our proprietary technology, access to high-quality benefits priced to their risk, and our exceptional service model. During the second quarter, our full year 2024 forecasted retention rate continued to improve, nudging closer to our record 2023 performance. However, I'm not comfortable yet declaring that we will repeat our record 2023 retention performance. However, I am pleased that we find ourselves in this improved position. Strong retention is helping offset slower net hiring within the customer base. Customers in the quarter continued to hire, albeit at slower rates than forecast.
Mike Simonds: For our services team, the ultimate performance measure is whether our customers stay with us for longer, and on this measure, our team is performing exceptionally well. Customers are benefiting from our proprietary technology access the high quality benefits priced to their risk and our exceptional service model. During the second quarter, our full year 2024 forecasted retention rate continued to improve. Nudging closer to our record 2023 performance, I'm not comfortable yet declaring that we will repeat our record 2023 retention performance. However, I am pleased that we find ourselves in this improved position. Strong retention is helping offset slower net hiring within the customer base.
Speaker Change: For our services team, the ultimate performance measure is whether our customers stay with us for longer, and on this measure, our team is performing exceptionally well.
Speaker Change: Customers are benefiting from our proprietary technology, access to high quality benefits priced to their risk, and our exceptional service model.
Speaker Change: During the second quarter, our full year 2024 forecasted retention rate continued to improve, nudging closer to our record 2023 performance.
Speaker Change: I'm not comfortable yet declaring that we will repeat our record 2023 retention performance. However, I am pleased that we find ourselves in this improved position.
Speaker Change: Strong retention is helping offset slower net hiring within the customer base.
Mike Simonds: Customers in the quarter continue to hire, albeit at slower rates than forecasted. One encouraging CIE data point I'd note is that so far in 2024 we have now booked five consecutive months of positive, yet modest, customer hiring; a first since 2022. In this environment, pricing across our offering has remained aligned with the value we provide and consistent with our customer's risk. We also continue to find ways to improve our processes and operate more efficiently, resulting in a reduction in operating expenses in the quarter. So taking together solid sales, great retention, pricing discipline, and well-managed expenses created another very good quarter and demonstrated once again that China is a strong cash-generated business.
Speaker Change: Customers in the quarter continue to hire, albeit at slower rates than forecasted.
Mike Simonds: One encouraging CIE data point I'd note is that so far in 2024, we have now booked five consecutive months of positive yet modest customer hiring, a first since 2022. In this environment, pricing across our offering has remained aligned with the value we provide and consistent with our customers' risk. We also continue to find ways to improve our processes and operate more efficiently, resulting in a reduction in operating expenses in the quarter.
Speaker Change: One encouraging CIE data point I'd note is that so far in 2024 we have now booked five consecutive months of positive yet modest customer hiring, a first since 2022.
Speaker Change: In this environment, pricing across our offering has remained aligned with the value we provide and consistent with our customers' risk.
Speaker Change: We also continue to find ways to improve our processes and operate more efficiently, resulting in a reduction in operating expenses in the quarter.
Mike Simonds: So taken together, solid sales, great retention, pricing discipline, and well-managed expenses created another very good quarter and demonstrated once again that TriNet is a strong cash generative business. Through the first half, we used our cash to repurchase nearly $135 million of stock and pay out $25 million in dividends through July, returning nearly $160 million in capital to shareholders.
Speaker Change: So, taken together, solid sales, great retention, pricing discipline, and well-managed expenses created another very good quarter and demonstrated once again that TriNet is a strong cash-generative business.
Mike Simonds: Business. Through the first half, we used our cash to repurchase nearly 135 million dollars of stock and pay out 25 million in dividends through July, returning nearly 160 million in capital to shareholders. We believe TriNet's stock at its current price represents significant long-term value, given our strong operating performance and our long-term growth prospects. And frankly, I am very optimistic about TriNet's future. While the SMB business environment is difficult at the moment, our business is demonstrating its resiliency. I'm now five months into my role, and I still have plenty to learn, but it's very clear to me that TriNet's business model is exceptional, and we have a very real growth opportunity in front of us.
Speaker Change: Through the first half, we used our cash to repurchase nearly $135 million of stock and pay out $25 million in dividends through July , returning nearly $160 million in capital to shareholders.
Mike Simonds: We believe TriNet stock, at its current price, represents significant long-term value given our strong operating performance and our long-term growth prospects. And frankly, I am very optimistic about TriNet's future. While the SMB business environment is difficult at the moment, our business is demonstrating its resilience. I'm now five months into my role, and I still have plenty to learn, but it's very clear to me that TriNet's business model is exceptional, and we have a very real growth opportunity in front of us.
Speaker Change: We believe TriNet's stock at its current price represents significant long-term value given our strong operating performance and our long-term growth prospects and frankly I am very optimistic about TriNet's future.
Speaker Change: While the SMB business environment is difficult at the moment, our business is demonstrating its resiliency.
Speaker Change: I'm now five months into my role, and I still have plenty to learn, but it's very clear to me that TriNet's business model is exceptional, and we have a very real growth opportunity in front of us.
Mike Simonds: We built a premium brand amongst the SMB community and the attractive verticals we target. Our service model fosters loyalty with our customer base. Our risk-taking approach to insurance allows us the platform still somewhat nascent to innovate and create value for customers and shareholders. And finally, we own our own technology and therefore control the customer experience and the runway to further quality and efficiency gains. We continue to do the strategy work I mentioned after 1Q, identifying the best areas for us to focus on in our pursuit of profitable growth. And while there's still work to be done, certainly one of the areas will be accelerated innovation in our approach to benefits.
Mike Simonds: We built a premium brand among the SMB community and the attractive verticals we target. Our service model fosters loyalty with our customer base. Our risk-taking approach to insurance allows us to platform, still somewhat nascent, to innovate and create value for customers and shareholders. And finally, we own our own technology, and therefore control the customer experience and the runway to further quality and efficiency gains.
Speaker Change: We've built a premium brand among the SMB community and the attractive verticals we target.
Speaker Change: Our service model fosters loyalty with our customer base.
Speaker Change: Our risk-taking approach to insurance allows us to platform
Speaker Change: still somewhat nascent to innovate and create value for customers and shareholders.
Speaker Change: And finally, we own our own technology and therefore control the customer experience and the runway to further quality and efficiency gains.
Mike Simonds: We continue to do the strategy work I mentioned after 1Q, identifying the best areas for us to focus on in our pursuit of profitable growth. And while there's still work to be done, certainly one of the areas will be accelerated innovation in our approach to benefit. What the market is experiencing here in 2024 with elevated healthcare inflation is reinforcing that SMBs should not try to solve for healthcare on their own.
Speaker Change: We continue to do the strategy work I mentioned after 1Q, identifying the best areas for us to focus on in our pursuit of profitable growth. And while there's still work to be done, certainly one of the areas will be accelerated innovation in our approach to benefits.
Mike Simonds: What the market is experiencing here in 2024 with elevated healthcare inflation is reinforcing that SMBs should not try to solve for healthcare on their own. These SMBs are coming to us for help, and we believe the growing cost and complexity of healthcare is a long-run tailwind for our business. Real opportunities exist to improve our data and analytic capabilities, innovate our benefits portfolio, and broaden our channels to capture this opportunity.
Speaker Change: What the market is experiencing here in 2024 with elevated healthcare inflation is reinforcing that SMBs should not try to solve for healthcare on their own.
Mike Simonds: These SMVs are coming to us for help, and we believe the growing cost and complexity of health care is a long-run tailwind for our business. Real opportunities exist to improve our data and analytic capabilities, innovate our benefits portfolio, and broaden our channels to capture this opportunity. At this point, we continue to round out and strengthen our leadership team with the recent additions of Tim Nimmer, Head of Insurance Services, and Shea Treadway, our new Chief Revenue Officer. Both were attracted to TriNet in large part because of our compelling long-term growth prospects as well as the people-focused culture here.
Speaker Change: These SMBs are coming to us for help, and we believe the growing cost and complexity of health care is a long-run tailwind for our business.
Speaker Change: Real opportunities exist to improve our data and analytic capabilities, innovate our benefits portfolio, and broaden our channels to capture this opportunity.
Mike Simonds: On this point, we continue to round out and strengthen our leadership team, with the recent additions of Tim Nimmer, head of insurance services, and Shae Treadway, our new Chief Revenue Officer. Both were attracted to Trinat in large part because of our compelling long-term growth prospects as well as the people-focused culture here. With Tim, I believe we have a leader who can both help us better manage the risk we take associated with our offering and foster a strong commercial culture to help drive growth. Tim comes to Trinat with deep knowledge and experience, having led pricing, underwriting, and innovation functions for two of the largest firms globally in the health insurance space.
Speaker Change: On this point, we continue to round out and strengthen our leadership team, with the recent additions of Tim Nimmer, Head of Insurance Services, and Shea Treadway, our new Chief Revenue Officer.
Speaker Change: Both were attracted to TriNet in large part because of our compelling long-term growth prospects as well as the people-focused culture here.
Mike Simonds: With Tim, I believe we have a leader who can both help us better manage the risk we take associated with our offering and foster a strong commercial culture to help drive growth. Tim comes to TriNet with deep knowledge and experience, having led pricing, underwriting, and innovation functions for two of the largest firms globally in the health insurance space. Shea brings to TriNet extensive SMB distribution experience at significant scale across multiple channels, including direct and intermediated, with a deep knowledge of insurance products and employee benefits brokers. With Shea, we take another step towards deepening our knowledge of multi-channel distribution and digital transformation, areas which are critical for broadly and efficiently targeting the SMB market.
Speaker Change: With Tim, I believe we have a leader who can both help us better manage the risk we take associated with our offering and foster a strong commercial culture to help drive growth.
Speaker Change: Tim comes to TriNet with deep knowledge and experience having led pricing, underwriting, and innovation functions for two of the largest firms globally in the health insurance space.
Mike Simonds: Shae brings to Trinat extensive SMB distribution experience at significant scale across multiple channels, including direct and intermediate, with a deep knowledge of insurance products and employee benefits brokerage. With Shae, we take another step towards deepening our knowledge of multi-channel distribution and digital transformation. Areas which are critical for broadly and efficiently targeting the SMB. Shay and Tim are joining a talented and motivated leadership team intently focused on strengthening our value prop, growing our business for the benefit of customers and shareholders, and fostering an inclusive and vibrant company culture necessary for us to achieve our goals. So, in summary, I'm pleased with a strong quarter and the resiliency of our business, and I'm so excited about the growth opportunity ahead.
Speaker Change: Shea brings to TriNet extensive SMB distribution experience at significant scale across multiple channels including direct and intermediated with a deep knowledge of insurance products and employee benefits brokerage.
Speaker Change: With SHEA, we take another step towards deepening our knowledge of multi-channel distribution and digital transformation, areas which are critical for broadly and efficiently targeting the SMB market.
Mike Simonds: Shea and Tim are joining a talented and motivated leadership team intently focused on strengthening our value proposition, growing our business for the benefit of customers and shareholders, and fostering an inclusive and vibrant company culture necessary for us to achieve our goals. So, in summary, I'm pleased with a strong quarter and the resiliency of our business, and I'm so excited about the growth opportunity ahead. For more on the quarter, I will now turn the call over to Kelly. Okay?
Speaker Change: Shea and Tim are joining a talented and motivated leadership team intently focused on strengthening our value prop, growing our business for the benefit of customers and shareholders, and fostering an inclusive and vibrant company culture necessary for us to achieve our goals.
Speaker Change: So, in summary, I'm pleased with a strong quarter and the resiliency of our business and I'm so excited about the growth opportunity ahead. For more on the quarter, I will now turn the call over to Kelly.
Kelly Tuminelli: For more on the quarter, I will now turn the call over to Kelly.
Kelly Tuminelli: Kelly? Thank you, Mike. Second quarter results reflect solid execution across our business. We performed well and delivered revenue at the high end of our guidance range. Sales were good and roughly in line with our prior year. Our insurance performance was within expectations in total. Health costs in Q2 remain elevated over last year's experience. In line with our forecast and consistent with broader trends in the industry. Workers' comp performance was favorable and exceeded our expectations. Our Workers' Comp program management remained strong, including our ability to price, reserve, and manage our claims. And expenses declined year over year as we prudently managed our resources across the business.
Kelly Lee Tuminelli: Thank you, Mike. Second quarter results reflect solid execution across our businesses. We performed well and delivered revenue at the high end of our guidance range. Sales were good and roughly in line with our prior year. Our insurance performance was within expectations in total. Health costs in Q2 remain elevated over last year's experience, in line with our forecast and consistent with broader trends in the industry.
Speaker Change: Kelly?
Kelly Lee Tuminelli: Thank you, Mike. Second quarter results reflect solid execution across our business. We performed well and delivered revenue at the high end of our guidance range.
Kelly Lee Tuminelli: Sales were good and roughly in line with our prior year.
Kelly Lee Tuminelli: Our insurance performance was within expectations in total. Health costs in Q2 remain elevated over last year's experience, in line with our forecast and consistent with broader trends in the industry. Workers' comp performance was favorable and exceeded our expectations.
Kelly Lee Tuminelli: Workers' Comp performance was favorable and exceeded our expectations. Our workers' comp program management remains strong, including our ability to price, reserve, and manage our claims. And expenses declined year over year as we prudently managed our resources across the business.
Kelly Lee Tuminelli: Our workers' comp program management remained strong, including our ability to price, reserve, and manage our claims. And expenses declined year over year as we prudently managed our resources across the business.
Kelly Tuminelli: Taken all together, we generated strong earnings and good cash flows, and we returned a significant amount of capital to shareholders through sherry purchases, as well as our dividend.
Kelly Lee Tuminelli: Taken all together, we generated strong earnings and good cash flows, and we returned a significant amount of capital to shareholders through share repurchases, as well as our dividends. Now, let's go a little deeper on our second quarter financial performance. In the quarter, total revenues grew 1% in line with the top end of our guidance, supported by improved retention and modest customer hiring. We finished the second quarter with approximately 354,000 worksite employees, up 6% year over year, and approximately 336,000 co-employed WSEs, up 1% year over year.
Kelly Lee Tuminelli: Taken all together, we generated strong earnings and good cash flows and we returned a significant amount of capital to shareholders through share repurchases as well as our dividend.
Kelly Tuminelli: Now let's go a little deeper on our second quarter financial performance. In the quarter, total revenues grew 1% in line with the top end of our guidance, supported by improved retention and modest customer hiring. We finished the second quarter with approximately 354,000 work site employees, up 6% year over year, and approximately 336,000 co-employed WSCs, up 1% year over year. In the quarter, retention outperformed our forecast as our investments in customer service continue to pay off. And our value proposition is resonating with solid new sales performance. We remain committed to investing in our Salesforce capacity and maturing our sales reps to capture more of our growing funnel.
Kelly Lee Tuminelli: In the quarter, retention outperformed our forecast as our investments in customer service continued to pay off, and our value proposition is resonating with solid new sales performance. We remain committed to investing in our Salesforce capacity and maturing our sales reps to capture more of our growing funnel. Finally, we benefited from modest customer hiring, or CIE, which helped drive our overall 1% year-over-year growth in co-employed WSCEs. Professional service revenue grew 5%, exceeding our high guidance by one point, largely driven by our volume growth and rate improvement. Insurance revenue grew 1% year over year. Consistent with our first quarter, healthcare participation rates were slightly lower and were partially offset by annual inflationary rate increases. Insurance costs grew 6% year-over-year.
Kelly Lee Tuminelli: Insurance cost growth again reflected higher health care and pharmacy cost inflation. However, these health cost trends were partially offset by strong workers' comp performance. At this point, we do not expect any further uncertainty stemming from the March cyber attack on Change Healthcare, as claims lags have normalized across April and May. However, the broader trends of higher utilization and cost inflation, however, do remain and are apparent across the health insurance industry. Related to workers' compensation, our results include positive prior period development of approximately $20 million.
Kelly Lee Tuminelli: Now let's go a little deeper on our second quarter financial performance. In the quarter, total revenues grew 1% in line with the top end of our guidance, supported by improved retention and modest customer hiring.
Kelly Lee Tuminelli: We finished the second quarter with approximately 354,000 worksite employees, up 6% year-over-year, and approximately 336,000 co-employed WSEs, up 1% year-over-year.
Kelly Lee Tuminelli: In the quarter, retention outperformed our forecast as our investments in customer service continued to pay off.
Kelly Lee Tuminelli: and our value proposition is resonating with solid new sales performance.
Kelly Lee Tuminelli: We remain committed to investing in our sales force capacity and maturing our sales reps to capture more of our growing funnel.
Kelly Tuminelli: Finally, we benefited from modest customer hiring or CIE, which helped drive our overall 1% year-over-year growth in co-employed WSCs. Professional service revenue grew 5%, exceeding our high guidance by one point, largely driven by our volume growth and rate improvement. Insurance revenue grew 1% year over year. Consistent with our first quarter, healthcare participation rates were slightly lower and were partially offset by annual inflationary rate increases. Insurance cost grew 6% year over year. Insurance cost growth, again, reflected higher healthcare and pharmacy cost inflation. However, these health cost trends were partially offset by strong work risk on performance.
Kelly Lee Tuminelli: Finally, we benefited from modest customer hiring, or CIE, which helped drive our overall 1% year-over-year growth in co-employed WSEs.
Kelly Lee Tuminelli: professional service revenue grew 5% exceeding our high guidance by one point largely driven by our volume growth and rate improvement
Kelly Lee Tuminelli: Insurance revenue grew 1% year-over-year. Consistent with our first quarter, health care participation rates were slightly lower and were partially offset by annual inflationary rate increases.
Kelly Lee Tuminelli: Insurance costs grew 6% year-over-year. Insurance cost growth again reflected higher health care and pharmacy cost inflation. However, these health cost trends were partially offset by strong workers comp performance.
Kelly Tuminelli: At this point, we do not expect any further uncertainty stemming from the March cyber attack on Change Healthcare, as claims legs have normalized across April and May. The broader trends of higher utilization and cost inflation, however, do remain and are apparent across the health insurance industry. Related to Worker's Confensation Our results include positive prior period development of approximately $20 million. As TriNet's overall networker's compensation reserves have declined over the years given the business mix, I would expect this to lessen over time. Taken all together, this broader insurance cost ratio to 88% in line with our second quarter guidance.
Kelly Lee Tuminelli: At this point, we do not expect any further uncertainty stemming from the March cyber attack on Change Healthcare, as claims lags have normalized across April and May.
Kelly Lee Tuminelli: The broader trends of higher utilization and cost inflation, however, do remain and are apparent across the health insurance industry.
Kelly Lee Tuminelli: Related to workers' compensation, our results include positive prior period development of approximately $20 million.
Kelly Lee Tuminelli: As TriNet's overall net workers' compensation reserves have declined over the years given the business mix, I would expect this to lessen over time. Taken all together, this brought our insurance cost ratio to 88%, in line with our second quarter guidance. Now let's turn to operating expenses. We continue to exercise expense discipline in the quarter, resulting in a 6% year-over-year decline.
Speaker Change: As TriNet's overall net workers' compensation reserves have declined over the years given the business mix, I would expect this to lessen over time.
Speaker Change: Taken all together, this brought our insurance cost ratio to 88% in line with our second quarter guidance. Now let's turn to operating expenses. We continue to exercise expense discipline in the quarter, resulting in a 6% year-over-year decline.
Kelly Tuminelli: Now let's turn to operating expenses. We continue to exercise expense discipline in the quarter, resulting in a 6% year-over-year decline. We are proactively managing our expenses, reducing our back office, while making targeted investments in growth and automation. Interesting common investments and our operating cash continued to positively contribute to our results in the income quarter. The income generated offset our interest expense, providing a net $1 million benefit to other income. Taken all together, we reported $1.20 in gap earnings per diluted share, and $1.53 of adjusted net income per diluted share, both exceeding the top end of our guidance ranges.
Kelly Lee Tuminelli: We are proactively managing our expenses, reducing our back office, while making targeted investments in growth and automation. Interest income on investments and our operating cash continued to positively contribute to our results in the second quarter. The income generated offset our interest expense, providing a net $1 million benefit to other income.
Speaker Change: We are proactively managing our expenses, reducing our back office, while making targeted investments in growth and automation.
Speaker Change: Interest income on investments and our operating cash continued to positively contribute to our results in the second quarter.
Speaker Change: The income generated offset our interest expense, providing a net $1 million benefit to other income.
Kelly Lee Tuminelli: So taken all together, we reported $1.20 in gap earnings per diluted share and $1.53 of adjusted net income per diluted share, both exceeding the top end of our guidance ranges. We had another strong quarter of cash generation to support our business and capital allocation. In the quarter, we delivered $136 million of adjusted EBITDA, and through the first half, we generated $130 million of corporate operating cash flows. We have returned $159 million to investors so far this year by repurchasing over 1.2 million shares during the first half of 2024 and paying $25 million in dividends through July. Our capital return priorities will remain unchanged.
Speaker Change: So taken all together, we reported $1.20 in gap earnings per diluted share and $1.53 of adjusted net income per diluted share, both exceeding the top end of our guidance ranges.
Kelly Tuminelli: We had another strong quarter of cash generation to support our business and capital allocation. In the quarter, we delivered $136 million of adjusted diva, and through the first half, we generated $130 million of corporate operating cash flows. We returned $159 million to investors so far this year by repurchasing over 1.2 million shares during the first half of 2024 and paying $25 million in dividends through July. Our capital return priorities remain unchanged. As we generate cash throughout the year, we will continue to deliver value to our shareholders by investing in our business for growth and using our cash flows to fund dividends and additional share repurchases.
Speaker Change: We had another strong quarter of cash generation to support our business and capital allocation.
Speaker Change: In the quarter, we delivered $136 million of adjusted EBITDA, and through the first half, we generated $130 million of corporate operating cash flows.
Speaker Change: We returned $159 million to investors so far this year by repurchasing over 1.2 million shares during the first half of 2024 and paying $25 million in dividends through July .
Kelly Lee Tuminelli: As we generate cash throughout the year, we will continue to deliver value to our shareholders by investing in our business for growth and using our cash flows to fund dividends and additional share repurchases. Now, let's turn to our third quarter and full year outlook. For the third quarter, we expect total revenues to be flat to up 3%, and Professional Service revenues to be in that same range.
Speaker Change: Our capital return priorities remain unchanged. As we generate cash throughout the year, we will continue to deliver value to our shareholders by investing in our business for growth and using our cash flows to fund dividends and additional share repurchases.
Kelly Tuminelli: Now let's turn to our third quarter and full year outlook. For the third quarter, we expect total revenues to be flat to up 3%, and professional service revenues to be in that same range. Our underlying assumptions in support of our revenue guidance include our expectation for modest growth in new sales, continued strong customer retention, and a limited contribution from CIE due to seasonal factors. Turning to our insurance cost ratio for the third quarter, we are forecasting a nice year of 88% to 91%. Finally, we're forecasting gap net income per diluted share to be in the range of 70 cents to $1.20, and adjusted net income per diluted share to be in the range of $1 to $1.50.
Kelly Lee Tuminelli: Our underlying assumptions in support of our revenue guidance include our expectation for modest growth in new sales, continued strong customer retention, and a limited contribution from CIE due to seasonal factors. Turning to our insurance cost ratio for the third quarter, we are forecasting an ICR of 88% to 91%. Finally, we're forecasting gap net income per diluted share to be in the range of $0.70 to $1.20, and adjusted net income per diluted share to be in the range of $1 to $1.50.
Speaker Change: Now let's turn to our third quarter and full year outlook.
Speaker Change: For the third quarter, we expect total revenues to be flat to up 3%.
Speaker Change: and professional service revenues to be in that same range.
Speaker Change: Our underlying assumptions in support of our revenue guidance include our expectation for modest growth in new sales, continued strong customer retention, and a limited contribution from CIE due to seasonal factors.
Speaker Change: Turning to our insurance cost ratio for the third quarter, we are forecasting an ICR of 88% to 91%.
Speaker Change: Finally, we're forecasting gap net income per diluted share to be in the range of $0.70 to $1.20, and adjusted net income per diluted share to be in the range of $1 to $1.50.
Kelly Tuminelli: Turning to the full year, we are leaving our full year guidance unchanged as our current forecast falls within that range. To remind you of that guidance, for revenues, we continue to expect total revenues in the range of down 1% to up 4% year over year, and for professional service revenues to grow in the range of 1% to 5%. We still believe our insurance cost ratio will fall between 87 and a half percent to 89 and a half percent. The low end of the range at 87.5% would reflect health-cost growth rates in the mid-single digits, primarily driven by a moderation of inpatient utilization.
Kelly Lee Tuminelli: Turning to the full year, we are leaving our full year guidance unchanged, as our current forecast falls within that range. To remind you of that guidance, for revenues, we continue to expect total revenues in the range of down 1% to up 4% year over year, and for professional service revenues to grow in the range of 1 to 5%. We still believe our insurance cost ratio will fall between 87.5% and 89.5%. The low end of the range, at 87.5%, would reflect health cost growth rates in the mid-single digits primarily driven by a moderation of inpatient utilization.
Speaker Change: Turning to the full year, we are leaving our full year guidance unchanged, as our current forecast falls within that range.
Kelly Lee Tuminelli: If health cost inflation remains in the high single-digit range, consistent with our first-half experience, we would expect our ICR to be closer to 89.5%. With respect to our earnings guidance, we continue to forecast GAP net income per diluted share in the range of $3.94 and $5.46, and adjusted net income per diluted share in the range of $5.25 to $6.80.
Speaker Change: To remind you of that guidance, for revenues, we continue to expect total revenues in the range of down 1% to up 4% year over year, and for professional service revenues to grow in the range of 1 to 5%.
Speaker Change: We still believe our insurance cost ratio will fall between 87.5% to 89.5%.
Speaker Change: The low end of the range, at 87.5%, would reflect health cost growth rates in the mid-single digits, primarily driven by a moderation of inpatient utilization.
Kelly Tuminelli: It helps cost inflation remains in the high-single digit range consistent with our first-half experience. We would expect RICR to be closer to 89.5%. With respect to our earnings guidance, we continue to forecast gap net income, per-diluted share, in the range of $3.94 and $5.46. And adjusted net income per-diluted share in the range of $5.25 to $6.80. When we report our Q3 earnings, we expect to refine our fourth quarter outlook at that time with another quarter behind us.
Speaker Change: If health cost inflation remains in the high single-digit range, consistent with our first-half experience, we would expect our ICR to be closer to 89.5%.
Speaker Change: With respect to our earnings guidance, we continue to forecast GAP net income per diluted share in the range of $3.94 and $5.46.
Speaker Change: and adjusted net income per diluted share in the range of $5.25 to $6.80.
Kelly Lee Tuminelli: When we report our Q3 earnings, we expect to refine our 4th quarter outlook at that time, with another quarter behind. As you can see, TriNet has delivered strong financial results and resiliency, given the backdrop of rising health care costs. We have a great business, which is well-positioned for growth as customer hiring resumes. We have returned capital to shareholders in line with our financial policy, and we have a positive outlook for the balance of the year. With that, I will pass the call to the operator for the Q&A portion. Operator?
Speaker Change: When we report our Q3 earnings, we expect to refine our fourth quarter outlook at that time with another quarter behind us.
Kelly Tuminelli: As you can see, TriNet has delivered strong financial results in resiliency given the backdrop of rising health care costs. We have a great business which is well-positioned for growth as customer hiring resins. We have returned capital to shareholders in line with our financial policy, and we have a positive outlook for the balance of the year.
Speaker Change: As you can see, TriNet has delivered strong financial results and resiliency, given the backdrop of rising healthcare costs. We have a great business, which is well positioned for growth as customer hiring resumes.
Speaker Change: We have returned capital to shareholders in line with our financial policy, and we have a positive outlook for the balance of the year.
Operator: With that, it will pass the call to the operator for the Q&A portion.
Speaker Change: With that, I will pass the call to the operator for the Q&A portion. Operator?
Operator: Operator? Thank you. We will now be in the question and answer session. Do ask a question. You need to press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your hands up before pressing the keys. See the time your questions have been addressed, and you are going to withdraw, please press star then two.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone. If you are using a speakerphone, please pick up your handset before pressing the button.
Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
Tencent Wong: At any time your question has been addressed and you would like to withdraw it, please press star 3. At this time, we will pause momentarily to assemble. And this morning's first question comes from Tencent Wong with JPMorgan. Thank you. Good morning for the details. Thanks for the details here.
Speaker Change: If at any time your question has been addressed and you would like to withdraw it, please press star then 2.
Operator: At this time, we will pause momentarily to assemble the roster.
Speaker Change: At this time, we will pause momentarily to assemble the roster.
Kyle Peterson: And this morning's first question comes from Tencentorn with JP Morgan.
Speaker Change: And this morning's first question comes from Tencent One with J.P. Morgan.
Kyle Peterson: Thank you.
Kyle Peterson: Good morning for the details. Thanks for details. Here are just some of the sales fronts coming in line. Which is good. I know that I think you mentioned 15% growth in sales has count aiming to grow 20%.
Tencent Wong: Just on the sales front, coming in line, which is good. I think you mentioned 15% growth in sales headcount, aiming to grow 20%. When do you expect?
Speaker Change: Thank you, good morning, for the details. Thanks for the details here. Just on the sales front, coming in line, which is good. I know that, I think you mentioned 15% growth in sales headcount, aiming to grow 20%. When do you expect?
Kyle Peterson: What do you expect the productivity there to come through and translate into higher sales results?
Mike Simonds: The productivity there should come through and translate into higher sales results. Is there a timetable that we should expect here? Thank you for your attention.
Speaker Change: The productivity there to come through and translate into higher sales results. Is there a timetable that that we should expect here?
Kyle Peterson: Is there a timetable that we should expect here? Take a more contingent.
Mike Simonds: It's Mike. I appreciate the question. And now we're definitely first, I just say encouraged with the sales momentum up about 30% on a yearly basis. And when we think about sort of, how are we meeting the market? with the relative strength of our offering, it's cool seeing that kind of traction in the first half.
Mike Simonds: It's my appreciate the question. Now, we are definitely first. I just say, encouraged with the sales momentum, up about 30% on a year he days. Basically, when we think about sort of how are we meeting the market? What's the value of strength of our offering at today? Well, seeing that contraction first out. And then also, I would say, having the attention number be as positive as it is. And as you know, the combination of the two is what we're really after. The end of the team making progress towards that goal of adding the volume that we bring in on a new sales pace.
Speaker Change: Hey, good morning. It's Mike. I appreciate the question and yeah, we're definitely, you know, first I just say encouraged with the sales momentum up about 30% on a year-to-date basis. And when we think about sort of how are we meeting the market?
Speaker Change: What's the relative strength of our offering, I'd say, seeing that contraction first half.
Mike Simonds: And then also, I would say, you know, having the retention number be as positive as it is. And, as you know, the combination of the two is what we're really after here. And we keep making progress towards that goal of having the volume that we bring in on a new sales basis match what we are losing through attrition. So, encouraged by the momentum, as you said, I think that's a function certainly of the growth in salespeople, 15% more. I think by the time we get into the busiest part of the selling season here in the next month or two, that number will have risen to about 20%.
Speaker Change: And then also, I would say, you know, having the retention number be as positive as it is. As you know, the combination of the two is what we're really...
Speaker Change: After him, we keep making progress towards that goal of having the volume that we bring in on a new sales basis match what we are losing through attrition. So, encouraged by the momentum.
Mike Simonds: It's not what we are losing through attrition. So I've encouraged by the momentum. Like you said, I think that's a function certainly of the growth in sales people 15% more. I think by the time we get into the videos part of the selling season here in the next month or two, the number of. I'm sorry, up to about 20%. I would say, well, you know, we see rooms to continue to grow as we look at a vertical look at the, the jails that we're in. In terms of sales capacity, but productivity has been a big part of the story here this year.
Speaker Change: Like you said, I think that's a function, certainly, of the growth in salespeople, 15% more. I think by the time we get into the busiest part of the sailing season here in the next...
Speaker Change: a month or two, that number will have floated up to about 20%.
Mike Simonds: I would say, you know, we see room to continue to grow as we look at our verticals, and at the geographies that we're in terms of sales capacity. But productivity has been a big part of the story here this year. And I would see that as continuing to be a big and probably a bigger driver going forward as we get to the busy part of the selling season through the one-to-one effect as we get into 2025.
Speaker Change: I would say we see room to continue to grow as we look at our verticals, look at the geos that we're in, in terms of sales capacity, but productivity has been a big part of the story here this year, and I would see that as continuing.
Mike Simonds: And I would see that is continuing to be a big and probably bigger driver going forward as to get through the busy part of selling season through the one one effect is as we get into 2020 thought.
Speaker Change: to be a big and probably bigger driver going forward as we get through the busy part of selling season through the 1-1 effect as we get into 2025.
Mike Simonds: So, there's a lot of work that's going on, including having their entire sales and customer relationship management team together in person next week to discuss the tools that we're equipping them with, the sales process that we're using, and the product enhancements that we're taking into the market. So, there'll be a balance between capacity and productivity with a lean towards productivity as we get through the coming, say, four to six quarter Okay, great, no, that's helpful to hear. Thanks for that, Mike. Just maybe one more from me, Mike.
Mike Simonds: So there's a lot of work that's going on, including having their entire sales and customer relationship management team together in person next week. On the tools that we're equipping them with, the sales process that we're using, the product enhancements that we're taking into the market. So being able to be announced between capacity and productivity with a lean towards productivity as we get through the coming take or six quarter.
Speaker Change: There's a lot of work that's going on, including having their entire sales and customer relationship management team together in person next week.
Speaker Change: on the tools that we're equipping them with, the sales process that we're using, the product enhancements that we're taking into the market. So, there'll be a balance between capacity and productivity with a lean towards productivity as we get through the coming, say, four to six quarters.
Kyle Peterson: Thanks for the mic.
Mike Simonds: Maybe one more from me. You mentioned accelerated innovation with approach to benefits. Can you maybe elaborate on what that means? It sounds like maybe leveraging better tools and letting me some night hires here as well to go after the benefit side of things.
Mike Simonds: Just, you mentioned accelerated innovation with the Approach to Benefits. Can you maybe elaborate on what that means? It sounds like maybe leveraging better tools. I know you made some nice hires here as well to go after the benefits side of things. So anything else to share? Yeah, that's right.
Speaker Change: Okay, great. That's helpful to hear. Thanks for that, Mike. Just maybe one more from me, Mike. You mentioned accelerated innovation.
Speaker Change: with Approach to Benefits. Can you maybe elaborate on what that means? It sounds like maybe leveraging better tools. I know you made some nice hires here as well to go after the benefits side of things. So anything else to share?
Mike Simonds: Anything else to share? Yeah, that's right. And Kelly talked about it in her prepared remarks. We're certainly dealing with accelerated healthcare inflation. And while that's a problem to work through for our customers as we price to risk and for us as we help them manage the cost and the complexity of healthcare, short term, you know, we've got to work through that. If you think about it more from a long-term point of view, that growing sustained cost increase complexity that's coming with the strategies that you put in place to help manage that cost and still deliver good value down to the consumer.
Mike Simonds: And Kelly talked about it in her prepared remarks that we're certainly dealing with accelerated healthcare inflation. And while that's a problem to work through for our customers as we price for risk, and for us as we help them manage the cost and the complexity of healthcare, in the short term, you know, we've got to work through that. If you think about it more from a long-term point of view, that growing sustained cost and increased complexity that's coming with the strategies that you put in place to help manage that cost and still deliver good value to the consumer, that's a tailwind for us at TriNet.
Speaker Change: Yeah, that's right. And Kelly talked about it in her prepared remarks. We're certainly dealing with accelerated health care inflation. And while that's
Speaker Change: a problem to work through for our customers as we price to risk and for us as we help them manage the cost and the complexity of health care.
Speaker Change: Short-term, you know, we've got to work through that. If you think about it more from a long-term point of view, that growing sustained cost increase, complexity that's coming with the strategies that you've put in place to help manage that cost and still deliver good value down to the consumer, that's a tailwind for us at TriNet.
Mike Simonds: That's a tailwind for us at TriNet. And to be a small business that's trying to deal with that kind of cost and complexity, that's not going away as we look out into 2025. We see the opportunity to continue to innovate and generate your talking about. So exactly now, I think we've made some key hires. I think we'll continue to invest in capability around the data that we have ability to insight that we can drive. The tools that we provide, some really good innovation towards the tailwind of last year on decision support, the Council of WSU, local helping them make the right choices for them and their family.
Mike Simonds: And to be a small business that's trying to deal with that kind of cost and complexity, that's not going away as we look out into 2025. We see the opportunity to continue to innovate things like you're talking about. So exactly that, I think we've made some key hires. I think we'll continue to invest in capability around the data that we have available, the insight that we can drive, the tools that we provide, some really good innovation towards the tail end of last year around decision support down to the WSU level, helping them make the right choices for themselves and their families. And I think, you know, relative to competition, TriNet is a little bit unique.
Speaker Change: And to be a small business that's trying to deal with that kind of cost and complexity, that's not going away as we look out into 2025.
Speaker Change: We see the opportunity to continue to innovate things like you're talking about so exactly that I think
Speaker Change: made some key hires. I think we'll continue to invest in capability around
Speaker Change: the data that we have, the ability, the insight that we can derive.
Speaker Change: The tools that we provide, some really good innovation toward the tail end of last year on decision support down to the WSU.
Mike Simonds: And I think, you know, relative to competition and trying, that is a little bit unique. We like to take some risks, do it in a disciplined way that towards us a little bit more creativity. So we start to see this opportunity to take what is already a strength for trying that and build on it to create a little bit more separation around a particularly acute pain point when it comes to healthcare and benefits.
Speaker Change: level, helping them make the right choices for them and their family. And I think, you know, relative to competition, TriNet is a little bit unique. We like to take some risks, do it in a disciplined way. That affords us a little bit more creativity. So...
Mike Simonds: We like to take some risks, but we do it in a disciplined way that affords us a little bit more creativity. So we sort of see this opportunity to take what is already a strength for TriNet and build on it, create a little bit more separation around a particularly acute pain point when it comes to healthcare and benefits. That's great. Thank you. [inaudible] Thank you. And the next question comes from Kyle Peterson with, " Great. Good morning.
Speaker Change: You sort of see this opportunity to take what is already a strength for TriNet and build on it and create a little bit more separation around a particularly acute pain point when it comes to health care and benefits.
Mike Simonds: It's great.
Speaker Change: That's great, thank you.
Kyle Peterson: And the next question comes on Kyle Peterson with me. Great.
Speaker Change: Thanks.
Speaker Change: Thank you. And the next question comes from Kyle Peterson with Natum.
Kyle David Peterson: Thanks, guys, for taking the questions. I just wanted to start off on professional services revenue. It seems like that was one of the better organic growth quarters we've seen in a little while here on a year-over-year basis. So I just wanted to see if you guys could provide any more color on kind of what is driving that. You know, is this mostly Salesforce productivity and new clients? Is there a contribution from some of the platform pieces or any more color that would be helpful?
Kelly Tuminelli: Good morning. Thanks, guys. Take the questions. You just want to start off on professional services revenue. Seems like that was one of the better organic growth quarters you always seen in a little while here. On a year of a year basis. So I just want to see if you guys could could drive any more color on kind of what is driving that. You know, is this mostly Salesforce productivity and new clients, sir. Is there a contribution from, you know, sort of platform piece up or any more color that would be helpful.
Kyle David Peterson: Great. Good morning. Thanks, guys, for taking the questions. I just wanted to start off on professional services revenue. It seems like that was...
Kyle David Peterson: One of the better organic growth quarters, you know, we've seen in a little while here on a year-over-year basis. So, I just wanted to see if you guys could provide any more color on kind of what is driving that, you know, is this mostly Salesforce productivity and new clients or
Speaker Change: Is there a contribution from, you know, some of the platform piece stuff or any more color that would be helpful?
Mike Simonds: Yeah, good morning. Appreciate the question. I think you had a couple of them, but we're continuing, like we were just talking about, continuing to see that really strong retention. That ends up being really consequential to us.
Kelly Tuminelli: Yeah, good morning. Appreciate the question. I think you had actually a couple of them. But we're continuing. What we were just talking about is to see how really strong we're attention that ends up being really consequential to us as strong retention. Gradual increase in these, reflecting kind of the inflation that's out there that's coming through. We have continued to innovate and mentioned benefit of decision support tools. We're finding that is creating value for our clients that create a little bit of the upside opportunity for us. So I wouldn't sort of point to any one thing, but in general, I sort of see things culminating, yeah, and a little bit of nice upside to the professional services route.
Speaker Change: Yeah, good morning. I appreciate the question. I think you had actually a couple of them.
Speaker Change: But we're continuing, like we were just talking about, continuing to see that really strong retention. That ends up being really consequential to us, so strong retention.
Mike Simonds: So, strong retention, gradual increase in fees, reflecting kind of the inflation that's out there that's coming through. We have continued to innovate. I mentioned benefit decision support tools.
Speaker Change: Gradual increase in fees reflecting kind of the inflation that's out there that's coming through.
Speaker Change: We have continued to innovate, I mentioned benefit of decision support tools, we're finding that is creating value for our clients, that creates a little bit of a fee.
Mike Simonds: We're finding that is creating value for our clients, and that creates a little bit of an upside fee opportunity for us. So, I wouldn't sort of point to any one thing, but in general, you sort of see these things coming together, yeah, and a little bit of nice upside for professional services throughout the country. Got it, that's helpful.
Speaker Change: upside opportunity for us. So I wouldn't sort of point to any one thing, but in general I sort of see these things culminating, yeah, in a little bit of nice upside to the professional services revenue.
Kyle Peterson: Got it, that's helpful.
Kyle David Peterson: And then, I guess just to follow up on CIE, it seems like some of the commentary and trends seem optimistic, but still kind of modest. I guess, on a seasonally adjusted basis in the second half of the year, are you guys assuming things are relatively similar to the first half, or are you guys projecting any improvement from what you guys have seen year-to-date? Yeah, Kyle, it's a great question, particularly given the uncertainty in the economy that we're facing right now.
Kyle Peterson: Then I guess just to follow up on CIE, it seems like some of the commentary trends seem optimistic, but still kind of modest. I guess on an extremely adjusted basis, in the second half the year, you guys assuming things are relatively similar to the first half, or are you guys projecting any improvement from what you guys have seen year to date? Yeah, Kyle, it's a great question, particularly given the answer to me on the economy that we're facing in right now. When we went into the year, we had assumed CIE and roughly the Zitz single digit. What we've seen so far is modest CIE, but we're pleased that we've seen five straight months of net positive CIE.
Speaker Change: Got it. That's helpful. And then I guess just a follow-up on CIE.
Speaker Change: I guess it seems like some of the commentary and trends seem optimistic, but still kind of modest.
Speaker Change: I guess on a seasonally adjusted basis, in the second half of the year, are you guys assuming...
Speaker Change: You know, things are relatively similar to the first half, or are you guys projecting any improvement, you know, from what you guys have seen year to date?
Speaker Change: Kyle, it's a great question, particularly given the uncertainty in the economy that we're facing in right now.
Mike Simonds: When we went into the year, we had assumed CIE in roughly the mid single digits. What we've seen so far is modest CIE, but we're pleased that we've seen five straight months of net positive CIE. We're cautious as we look at the rest of the year. So the way we're thinking of the rest of the year really is, one, the third quarter generally has some seasonal headwinds, just because we have seasonal hiring that slows down, and we've got interns that are going back to school, a few things like that.
Kyle David Peterson: When we went into the year, we had assumed CIE in roughly the mid-single-digit. What we've seen so far is modest CIE, but we're pleased that we've seen five straight months of net positive CIE.
Kelly Tuminelli: We're cautious as we look at the rest of the year. So the way we're thinking of the rest of the year really is one, third quarter, generally has some seasonal headlines, just because we have seasonal hiring that the lessons and we've got interns that are going not to school. A few things like that, but you know, our outlook for the rest of the year is really low single digit.
Kyle David Peterson: We're cautious as we look at the rest of the year, so the way we're thinking of the rest of the year really is one third quarter.
Speaker Change: generally have some seasonal headwinds just because we have seasonal hiring that lessens and we've got interns that are going back to school, a few things like that. But, you know, our outlook for the rest of the year is really low single digit.
Mike Simonds: You know, Kelly might just pile on to take a step back and say, you think about the business, you know, we're sort of, if you take a long, long run view, we operate in really attractive verticals. Again, Trump's pretty unique in the degree of focus that we have on particularly these higher growth verticals. So we're a long stretch of time; average CIE is in that, you know, 8 to 12 percent range. That's kind of the norm for us. It's kind of in the current period, like Kelly saying, to be in the very low single digits and still be demonstrating good, strong results.
Speaker Change: Kelly, I might just pile on, just take a step back and say, when you think about the business,
Mike Simonds: But, you know, our outlook for the rest of the year is really low single-digits, to get a long, long run view. We operate in really attractive verticals, and again, TriNet's pretty unique in the degree of focus that we have on, particularly, these higher growth verticals. So over a long stretch of time, average CIE is in that eight to 12% range. That's kind of the norm for us.
Kelly Lee Tuminelli: If you take a long, long run view, we operate in really attractive verticals. And again, TriNet's pretty unique in the degree of focus that we have on particularly these higher growth verticals.
Kelly Lee Tuminelli: over a long stretch of time.
Kelly Lee Tuminelli: average CIE is in that, you know, 8 to 12 percent range. That's kind of the norm for us. It's kind of in the current period, like Kelly's saying, to be
Mike Simonds: It's kind of in the current period, like Kelly was saying, to be in the very low single digits and still be demonstrating good, strong results. I mean, it is the resiliency of the model, but it's also a reason for optimism as you look forward and into more normalization of that CIE, particularly when sales and attrition are coming closely in line. That's a pretty big opportunity. I just didn't want to miss the opportunity to highlight it.
Kelly Lee Tuminelli: in the very low.
Kelly Lee Tuminelli: Single digits and still be demonstrating good strong results. I mean it is the resiliency of the model, but it's also reason
Mike Simonds: I mean, it is a resiliency of the model, but it's also reason for often, as I mentioned, look forward and to more normalization of that CIE, particularly the sales and the tertiary are coming close to the line up. It's a pretty big opportunity.
Kelly Lee Tuminelli: for optimism as you look forward and into more normalization of that CIE, particularly when sales and attrition are coming closely in line. That's a pretty big opportunity. I just didn't want to miss the opportunity to highlight.
Kyle Peterson: I just didn't want to miss the opportunity to highlight. Yeah, yeah, that makes sense.
Kyle David Peterson: Yeah, yeah, that makes sense. Thanks for taking the questions, and I'll see you next quarter, guys. Great. Thank you, Kyle.
Kyle Peterson: Thanks for taking the questions and escorting us. Great. Thank you.
Speaker Change: Yeah, yeah, that makes sense. Thanks for taking the questions and nice quarter, guys.
Jared Marshall Levine: Thank you. The next question is from Jared Levine with TD County. Thank you. So, if we exclude the reserve release and 2Q here, the insurance cost ratio came in above the high end of the guide there. Can you dig into what drove that higher and then anticipated ICR as well as the affirmation of the ICR Guide to the Year despite the 2QB? Yeah, happy to do so, Jared. It's Kelly.
Jared Levine: And then I trust Professor Jared Levine with TD Galen. Thank you.
Speaker Change: Great. Thank you, Kyle.
Speaker Change: Thank you. And the next question is from Jared Levine with TD Cowen.
Kelly Tuminelli: So if it looks like we exclude the reserve release and two queue here, insurance cost ratio came in above the high end of the guidance. You dig into what drove that higher in the benefits of CIER, as well as the affirmation of the high CIER guys, so the year despite the two QB. Yeah, happy to do so. Jared is Kelly.
Jared Marshall Levine: Thank you. So if it looks like we exclude the reserve release and 2Q here, insurance cost ratio came in above the high end of the guide there. Can you dig into what drove that higher rate than anticipated ICR as well as the affirmation of the ICR Guide for the Year despite the 2Q beat?
Kelly Lee Tuminelli: Let me go back to Workers' Comp for a moment. You know, regarding Workers' Comp, we did highlight that we had about a $20 million reserve release associated with prior period development. As we did our, you know, as a reminder, second quarter and fourth quarter, we did a more thorough, you know, picking up the pieces on our reserves and making sure we're doing a more thorough reserve review with our external actuaries. So really, what we saw was, you know, a little bit of an outsized look.
Jared Marshall Levine: Yeah, happy to do so, Jared. It's Kelly.
Kelly Tuminelli: Let me detect workers' comfort for a moment. You know, we're going workers' comforted high light that we have about a $20 million reserve release associated with prior query development, as we did our, you know, as a reminder, a seven quarter and fourth quarter, we do a more thorough, you know, picking up the tires on our reserve to make sure we're doing a more thorough reserve review with our external actuaries. So really what we saw was, you know, a little bit of an precise look, so if I took that outside impact in the quarter out, at the end of the range, still from a health insurance perspective, you know, the one thing that we're looking forward to remind you as well is we do have a model where we have an opportunity to replace on a quarterly basis.
Speaker Change: Let me dissect workers' comp for a moment. Regarding workers' comp, we did highlight that we had about a $20 million
Speaker Change: Associated with Prior Period Development as we did our, you know, as a reminder second quarter and fourth quarter We do a more thorough, you know, picking of the tires on our reserves and making sure we're doing a more thorough reserve review with our external actuaries
Speaker Change: So really what we saw was, you know, a little bit of an outsized look. So if I took that outsized impact in the quarter out, I'd be in the range still from a health insurance perspective.
Kelly Lee Tuminelli: So if I took that outsized impact in the quarter out, I'd still be in the range from a health insurance perspective. You know, the one thing we're looking forward to reminding you as well, as we do have a model where we have an opportunity to reprice on a quarterly basis. So, you know, we are looking at our 10-1 renewals and evaluating that. And as we went into the year, we did lower our guidance related to or raise our guidance associated with the insurance cost ratio this quarter because of just the trends that we were seeing. And those trends just continue along the same lines that we saw.
Speaker Change: [inaudible]
Speaker Change: You know, the one thing we're looking forward to remind you as well is we do have a model where we have an opportunity to reprice on a quarterly basis.
Kelly Tuminelli: So, you know, we are looking at our 10-1 renewals and evaluating that, you know, as we went into the year, you know, we did lower our guidance related to, or raise our guidance associated with the insurance cost ratio this quarter because of just the trends that we were seeing and as trends just continue along with things like that we saw. So, you know, I feel good about the guidance, you know, as you talked about on a fully rebases, and I laid out a few things in the behind of the ice here, but I think work position well.
Speaker Change: So, you know, we are looking at our 10-1 renewals and evaluating that.
Speaker Change: And as we went into the year, we did lower our guidance related to, or raise our guidance associated with the insurance cost ratio this quarter because of just the trends that we were seeing, and those trends just continue along the same lines that we saw.
Kelly Lee Tuminelli: So, you know, I feel good about the guidance, as you talked about, on a full-year basis. And I laid out a few things in my prepared remarks in terms of what would bring us to the low end of the ICR and what would bring us to the high end of the ICR, but I think we're positioned well. Thank you. And then, in terms of, can you give us an update here in terms of the PO demand environment? If I heard correctly, it sounds like sales headcount is up 20% year over year, but bookings were flat.
Speaker Change: So, you know, I feel good about the guidance, you know, as you talked about, on a full year basis, and I laid out a few things in the prepared remarks in terms of what would bring us to the low end of the ICR and what would bring us to the high end of the ICR, but I think we're positioned well.
Jared Levine: Thank you, and then in terms of, can you give us an update here in terms of the PO demand environment? If I heard correctly, it sounds like sales headcount is up 20% year a year, but the bookings were flat. So, are you seeing anything in terms of elongated sales cycle or anything to call on in terms of the PO demand environment broadly here?
Jared Marshall Levine: So are you seeing anything in terms of an elongated sales cycle or anything to call out in terms of the PO demand environment broadly here? Yeah, Jared, I appreciate the question. I don't think I would call anything in particular out.
Speaker Change: Thank you. And then in terms of, can you give us an update here in terms of the P.O. demand environment? If I heard correctly, it sounds like sales headcount is up 20% year-over-year, but the bookings were flat. So are you seeing anything in terms of elongated sales cycle or anything to call out in terms of the P.O. demand environment broadly here?
Mike Simonds: Yeah, Jared, do I get to appreciate the question? I don't think I would call anything in particular. Overall demand environment has been good, and as we look at the pipeline heading into the business challenge season, we're comfortably ahead in the pipeline of where we were in the prior year. I needed a competitive market; I think in general, it's a competitive market, as I'm spending time with our sales people and some of our channel partners. For the reasons that we've talked about, I think there is a strong interest for PEOs that some of these are looking for help in dealing with many of the challenges that China has solved for.
Speaker Change: Yeah, Jared, I appreciate the question. I don't think I would call anything in particular out. I mean, you know, overall demand environment has been good and as we look at the pipeline heading into the busiest selling season, we're
Mike Simonds: I mean, you know, overall, the demand environment has been good, and as we look at the pipeline heading into the busiest selling season, we're comfortably ahead in the pipeline of where we were in the prior year. It is a competitive market, I think, in general. It's a very competitive market. As I'm spending time with our salespeople and some of our channel partners, for the reasons that we've talked about, I think there is a strong interest in PEOs.
Speaker Change: comfortably ahead in the pipeline of where we were in the prior year.
Speaker Change: It is a competitive market. I think in general it's a competitive market as I'm spending time with our
Speaker Change: salespeople and some of our channel partners.
Mike Simonds: SMBs are looking for help in dealing with many of the challenges that TriNet salts for. I would say in an inflationary health care cost environment, it is going to cause more shopping behavior. People are going to be disciplined. The numbers are bigger. Again, we like how we sit from a relative point of view.
Speaker Change: For the reasons that we've talked about, I think there is a strong interest for PEOs, SMBs are looking for help in dealing with many of the challenges that TriNet solves for.
Mike Simonds: I would say in an inflationary healthcare cost environment, it is going to cause more shopping behavior. People are going to be disciplined; the numbers are bigger. Again, we like how we sit on a relative point of view. We do take a disciplined approach and price to risk, and the impacts that we're feeling from a healthcare point of view. Every data point tells us these are broad and consistent impacts dealt across the entire industry, so there's no reason to believe that our relative position to deteriorate. I do know that we will stick to a very disciplined approach.
Speaker Change: I would say in an inflationary healthcare cost environment, it is going to cause more shopping behavior. People are going to be disciplined. The numbers are bigger. Again, we like how we sit among relatives.
Mike Simonds: We do take a disciplined approach to price to risk. And, you know, the impacts that we're feeling from a health care point of view, every data point tells us these are broad and consistent impacts felt across the entire industry. So there's no reason to believe that our relative positions would deteriorate. I do know that we will stick to a very disciplined approach. But will every single player have to get there?
Speaker Change: We do take a disciplined approach in price to risk and the impacts that we're feeling from a healthcare point of view.
Speaker Change: Every data point tells us these are broad and consistent impacts felt across the entire industry. So there's no reason to believe that our relative position would deteriorate.
Mike Simonds: Will they get there at exactly the same pace? I don't know. We'll watch that pretty closely. But in terms of the pipeline, in terms of the capacity being up 15 to 20 percent from a representative standpoint, those are things that give us some confidence here. Great. Thank you. Thank you. Thank you, and once again, as a reminder, please press star then 1 if you would like to ask a question. And the next question comes from Andrew Nicholas with William. Hi, good morning.
Mike Simonds: Well, every single player will have to get there. Will they get there at exactly the same pace? I don't know; we'll watch that pretty closely, but in terms of the pipeline, in terms of the capacity being up to 20% from a ramp standpoint, those are things that give us confidence here.
Speaker Change: I do know that we will stick to a very disciplined approach. Will every single player have to get there? Will they get there at exactly the same pace? I don't know. We'll watch that pretty closely.
Speaker Change: In terms of the pipeline, in terms of the capacity being up 15 to 20% from a rep standpoint, those are things that give us some confidence here.
Jared Levine: Thank you.
Speaker Change: Thank you.
Operator: Once again, as a reminder, please press star, then one, if you would like to ask a question.
Speaker Change: Thank you.
Speaker Change: Thank you. And once again, as a reminder, please press star then 1 if you would like to ask a question.
Andrew Negalos: And the next question comes from Andrew Negalos with William Blair. Hi, good morning. Thank you for taking my questions.
Speaker Change: And the next question comes from Andrew Nicholas with William Blair.
Andrew Owen Nicholas: Thank you for taking my questions. I wanted to ask about expense control, another kind of really good quarter on that front. Just curious, maybe Kelly, as to the sustainability of these kind of expense levels through the remainder of the year and beyond, and also the extent that, you know, CIE were to deteriorate or macroeconomic conditions were to deteriorate if there are other levers that you still have within the cost space to protect margins in that. It's a great question, Andrew.
Andrew Negalos: I wanted to ask about expense control. Another really good quarter on that front. Just curious, maybe Kelly, as to the sustainability of these kind of expense levels through the main to the year, but even beyond. And also, they spend that, you know, CI. You were to deteriorate or macroeconomic conditions were to deteriorate if there are other lovers that you still have within the cost space to protect margins in that type of environment. It's a great question, Andrew. And you know, first, I want to give kudos to the team for doing the right thing in terms of focusing on where we're spending money.
Andrew Owen Nicholas: Hi, good morning. Thank you for taking my questions.
Andrew Owen Nicholas: I wanted to ask about expense control, another kind of really good quarter on that front. Just curious, maybe Kelly, as to the sustainability of these kind of expense levels.
Speaker Change: through the remainder of the year but even beyond and also the extent that you know CIE were to deteriorate or macroeconomic conditions were to deteriorate if there are other levers that you still have within the cost space to protect margins in that type of environment.
Kelly Lee Tuminelli: And, you know, first I want to give the kudos to the team for doing the right thing in terms of focusing on where we're spending money, making sure that we're deploying every shareholder dollar in the right spot to be able to help drive growth and improve efficiency there. You know, really, what we've done is we've reduced our G&A to invest in growth, a similar theme to what I've been talking about all year.
Kelly Lee Tuminelli: It's a great question, Andrew, and, you know, first I want to give the kudos to the team for doing the right thing in terms of focusing on where we're spending money, making sure that we're deploying every shareholder dollar in the right spot to be able to help drive growth and improve efficiency there.
Kelly Tuminelli: Making sure that we're deploying every shareholder dollar in the right spot to be able to help drive growth and improve efficiency there. You know, really what we've done is we reduced our DNA to invest in growth, a similar thing to what I've been talking about all year. But we did when we looked over here; we had a benefit from, you know, fully integrating our HR ads offering last year. So we did have a little bit outside the cost last year that I wouldn't expect to recover. But we do, you know, share question; we've got an opportunity to continue to drive operating leverage.
Kelly Lee Tuminelli: Really what we've done is we've reduced our GNA to invest in growth, a similar theme to what I've been talking about.
Kelly Lee Tuminelli: But we did, when you look year over year, we had a benefit from fully integrating our HRAS offering last year, so we did have a little bit of outsized costs last year that I wouldn't expect to recur. But we do, you know, to your question, we've got an opportunity to continue to drive operating leverage. And, you know, as we grow, we will not grow our expenses proportionally with that, and we are working, you know, kind of every lever to make sure that, you know, we're being as efficient as possible. But at the end of the day, we're not going to constrain productive investments in growth.
Kelly Lee Tuminelli: all year, but we did, when you look year over year, we had a benefit from, you know, fully integrating our HRAS offering last year, so we did have a little bit of outsized cost last year that I wouldn't expect to recur.
Kelly Lee Tuminelli: But we do, you know, to your question, we've got an opportunity to continue to drive operating leverage. And, you know, as we grow, we will not grow our expenses proportionally with that.
Kelly Tuminelli: And, you know, as we grow, we will not grow our expenses proportionally with that. And are working, you know, kind of every lever to make sure that we're being as efficient as possible.
Kelly Lee Tuminelli: and are working, you know, kind of every lever to make sure that, you know, we're being as efficient as possible. But at the end of the day, we're not going to constrain productive investments in growth.
Kelly Tuminelli: But at the end of the day, we're not going to constrain productive investment in growth.
Andrew Owen Nicholas: Thank you. And then for my follow-up, a separate topic altogether, it's just on the Worksite Employee Dynamics change in existing. Could you speak to the verticals that you guys are focused on and whether or not there were any meaningful changes in trend or overall optimism or willingness to buy at that level? I'm particularly interested.
Mike Simonds: Thank you, and then for my follow-up step-to-step, I call it together. We're just on the work set employee dynamic change and existing. Can you speak to the verticals that you guys are focused on and whether or not there is any meaningful changes in trend or overall. Optimism, we're really used to buy at that level, particularly interested in technology, which obviously had some starts and stops at the past year. Thank you. Yeah, it's a great question, and as we look across all of our verticals, you know, I did another scan this morning to make sure. We had the row underlying story there, and you know, from a tech perspective, we've had a couple of good months in tech, and the last two orders have been, you know, modestly positive in tech.
Speaker Change: Thank you, and then...
Speaker Change: For my follow-up, separate topic altogether, it's just on the worksite employee dynamic change and existing. Can you speak to...
Speaker Change: The verticals that you guys are focused on and whether or not there is any meaningful changes in trend or overall optimism or willingness to buy at that level. I'm particularly interested.
Mike Simonds: Technology, which has obviously had Starts and Stops in the past year or two. Thank you. Yeah, it's a great question.
Speaker Change: in technology, which has obviously had some starts and stops in the past year or two. Thank you.
Mike Simonds: And as we look across all of our verticals, you know, I did another scan this morning to make sure we had the real underlying story there. And, you know, from a tech perspective, we've had a couple good months in tech, and the last two quarters have been, you know, modestly positive in tech. So I'm encouraged by that. Regarding the other verticals, while we're still seeing a little bit of pressure in professional services, basically all six of our verticals did show positive CIE for the full quarter. Helpful, thank you.
Speaker Change: Yeah it's a great question and as we look across all of our verticals, you know, I did another scan this morning to make sure
Speaker Change: You know, we had the row underlying story there, and even from a tech perspective, we've had a couple good months in tech, and the last
Speaker Change: two porters have been, you know, modestly positive.
Mike Simonds: So I'm encouraged by that. You know, we're guarding the other verticals where we're still feeling a little bit of pressure in a professional services. Basically, all six of our verticals did show positive CIE to the full quarter. Thank you.
Speaker Change: in tech, so I'm encouraged by that.
Andrew Owen Nicholas: Thank you. And the next question comes from Kevin Vease with UBS. Great, thanks so much. This may be for Kelly.
Speaker Change: Helpful, thank you.
Kevin Mcveigh: And the next question comes with common views of your BS. Great. Thanks so much.
Speaker Change: Thank you. And the next question comes from Kevin Vease with UBS.
Kevin Mcveigh: Hey, it's maybe for Kelly. Can you maybe disaggregate that the 25% over performance? I know you talked about workers' top and SGNA.
Kevin Damien McVeigh: Great, thanks so much. Hey, this may be for Kelly. Can you maybe disaggregate the $0.25 overperformance? I know you talked about workers' comp and SG&A. Is there any way to maybe think about how much of it was the workers' comp, SG&A, or maybe anything else that drove that?
Kevin Damien McVeigh: Can you maybe desegregate the $0.25 overperformance? I know you talked about workers' comp and SG&A. Is there any way to maybe think about how much of it was the workers comp SG&A or maybe anything else that drove that? Yeah, you know, we can probably help you, Kevin, offline on your model, just by going through the P&L that we published. But I do think, you know, insurance, when I look at insurance overall, it's kind of, sort of right in the middle of the range. So it really was driven, you know, by both expense efficiency and continued prudence from an investment perspective, as well as capital allocation.
Kelly Tuminelli: You know, we can probably help you, Kevin, offline on your model, just by going through the piano that we published. But I do think, you know, insurance, when I look at insurance or borrow, it was kind of sort of right in the middle of the range. So it really was driven, you know, by both expensive efficiency, you know, continued conclusions from an investment perspective as well as capital allocation. You know, we did, as you saw, we deployed, you know, almost 135 million year to date on short purchase.
Kelly Lee Tuminelli: Yeah you know we can probably help you Kevin offline on your model just by going through the the P&L that we published but I do think you know insurance when I look at insurance overall it was kind of
Speaker Change: sort of right in the middle of the range.
Speaker Change: So, it really was driven, you know, by both expense efficiency, you know, continued prudence from an investment perspective, as well as capital allocation.
Kelly Lee Tuminelli: You know, we did, as you saw, we deployed, you know, almost $135 million year to date on a charade purchase. And, you know, not that this helps EPS, but, you know, just a reminder that we paid our second dividend on Monday of this week. And so we're up to about $25 million in dividends, as well. So I do think the capital story definitely helped from an EPS perspective, as well.
Speaker Change: You know, we did, as you saw, we deployed, you know, almost $135 million a year to date on Charade Purchase.
Kelly Tuminelli: And, you know, not, not that this helped CPS, but, you know, just to reminder that we paid our second dividend on Monday of this week and so we're at to about 25 million inch evidence as well. So I do think the capital story that's not only helped from the PS perspective as well.
Speaker Change: And, you know, not that this helps EPS, but, you know, just a reminder that we paid our second dividend.
Speaker Change: on Monday of this week, and so we're up to about $25 million in dividends as well. So I do think the capital story definitely helped from an EPS perspective as well.
Mike Simonds: So, and then, like, you know, I know you're kind of five months into the role.
Mike Simonds: And then, Mike, you know, I know you're kind of five months into the role, so I always like to ask you any thoughts and takes as you think about the business model relative to what your expectations were coming in. Yeah, thanks, Kevin. It's, like you said, five months in, most of that time spent having a lot of conversations with customers and colleagues, thinking hard about things that we do really well today and what changes we can make going forward. And for me, the conclusion I reach is this is really a great business. It really is.
Mike Simonds: And then, Mike, I know you're kind of five months into the role, I always like to ask, any puts and takes as you think about the business model relative to what your expectations were coming in?
Mike Simonds: It was like to ask any puts and takes as you think about the business model relative to what your expectations were coming in. Yeah, thanks, Kevin. It's, um, that, like you said, five months in most of that time, um, spent having a lot of conversations with, uh, going forward and, and for me, like the conclusion I reach is this is really a great business. It really is. And I think there's a lot of been happening in the market, and we talked about health care. We talked about, um, having our own technology and therefore having that run way to really control that customer experience and trying to somewhat unique in terms of the strength of that technology.
Mike Simonds: Yeah, thanks, Kevin.
Mike Simonds: It's, like you said, five months in, most of that time spent.
Mike Simonds: having a lot of conversations with customers and colleagues, thinking hard about things that we do really well today and what changes we can make going forward. For me, the conclusion I reach is this is really a great business.
Kevin Damien McVeigh: And I think there are a lot of things happening in the market. And We talked about health care. We talked about having our own technology and, therefore, having that runway to really control that customer experience and try to be somewhat unique in terms of the strength of that technology. I'm encouraged. And for me, I think probably the biggest opportunity is picking the small set of really great, Truly, big opportunities for profitable growth and focusing the considerable amount of talent and expertise that we have here at TriNet on those smaller sets of ideas and pursuing them vigorously, and doing it with the backdrop of such a strong business model.
Speaker Change: It really is. And I think there's a lot of things happening in the market. We talked about health care, we talked about having our own technology, and therefore having that runway to really control that customer experience and trying to somewhat unique in terms of the strength of that technology.
Mike Simonds: I'm encouraged, and for me, I think how long the biggest opportunity is, is picking the small set of really great choices, truly the big opportunities for profitable growth and focusing the considerable amount of time and expertise that we have here at TriNet on those smaller set of ideas and pursuing them vigorously and doing it with the backdrop of such a strong business model. So we not expect big change in terms of the strategic direction at TriNet, but I would expect probably a little bit more of focus and specificity as we look to sort of accelerate those opportunities for profitable and sustainable growth.
Speaker Change: I'm encouraged. And for me, I think probably the biggest opportunity is picking the small set of really great people.
Speaker Change: choices, truly the big opportunities for profitable growth.
Speaker Change: and focusing the considerable amount of talent and expertise that we have here at TriNet on those.
Speaker Change: smaller set of ideas and pursuing them vigorously.
Kevin Damien McVeigh: So I would not expect a big change in terms of the strategic direction at TriNet, but I would expect probably a little bit more focus and specificity as we look to sort of accelerate those opportunities for profitable and sustainable growth. It's super helpful.
Speaker Change: and doing it with the backdrop of such a strong business model. So I would not expect big change in terms of the strategic direction at TriNet, but I would expect probably a little bit more of focus and specificity as we look to sort of accelerate those opportunities for profitable and sustainable growth.
Kevin Mcveigh: It's super helpful. Thank you.
Kevin Mcveigh: Thanks.
Speaker Change: It's super helpful. Thank you.
Operator: Thank you.
David Grossman: And then I suppose it comes to David Grossman with staple. Good morning. Thank you. I just had a couple of really quick follow-ups. One is you, you, I think Mike, when you, you know, talked when he first joined, you talked about expanding the distribution channels, and it looks like you made a hire that has some experience in that, in that area. So do you want to talk a little bit about what we should expect to see as, you know, kind of that new hire kind of ramps up and kind of what you're mandating that person to achieve over the next 12, 18 months.
Mike Simonds: Thank you. Thank you. And the next question comes from David Grossman with Steve. Good morning.
Speaker Change: Thanks.
Speaker Change: Thank you. And the next question comes from David Grossman with Staple.
David Michael Grossman: Thank you. I just had a couple of really quick follow-ups. One is you, Mike, when you talked when you first joined, you talked about expanding the distribution channels, and it looks like you made a hire that has some experience in that area. So do you want to talk a little bit about what we should expect to see as that new hire kind of ramps up and kind of what you're mandating that person to achieve over the next 12 to 18 months? Jared, it's great to hear from you, David. Good morning.
David Michael Grossman: Good morning. Thank you. I just had a couple of really quick follow-ups. One is you, I think Mike, when you, you know, talked when you first joined, you talked about
Speaker Change: expanding the distribution channels and it looks like you've made a hire that has some experience in that.
Speaker Change: in that area. So do you want to talk a little bit about what we should expect to see as you know kind of that new hire kind of ramps up and and kind of what you're mandating that person to achieve over the next 12 to 18 months?
Mike Simonds: It's great here from the day to come in the morning. I think I would just actually start by saying our primary go to market is and will be our direct sales team. I think it's something that sets us apart, and we talked about the investments that we've made reallocating resources from across the business into that sales team. And having spent a lot of time across the country with those folks here in the first five months. It's a very special group, and one we want to continue to invest in. That being said, I think there is an opportunity to augment that.
Mike Simonds: I think I would just actually start by saying our primary method of going to market is and will be our direct sales team. And I think it's something that sets us apart. And we talked about the investment that we've made reallocating resources from across the business into that sales team. And having spent a lot of time across the country with those folks here in the first five months, it's a very special group and one we want to continue to invest in.
Speaker Change: It's great to hear from you, David, and good morning.
David Michael Grossman: I think I would just actually start by saying our primary go-to-market is and will be our direct sales team and I think it's something that sets us apart and we talked about the investment.
David Michael Grossman: that we've made reallocating resources from across the business into that sales team. And having spent a lot of time across the country with those folks here in the first five months, it's a very special group and one we want to continue to invest in.
Mike Simonds: That being said, I think there is an opportunity to augment that. And, you know, one of those opportunities is around the brokerage channel. And again, as we sort of invest in the data, the analytics, the innovation that we can bring around benefits, that's a very, very big part of the market where employee benefits brokers have influence. And our best sales people, by the way, are already building those relationships organically in local markets. So again, not a huge change.
David Michael Grossman: That being said, I think there is an opportunity to augment that and you know one of those opportunities
Mike Simonds: And, you know, one of those opportunities is around the brokerage channel. And again, as we sort of invest in the data analytics, the innovation that we can bring around benefits. That's a very, very big part of the market where employee benefits brokers have influence. And our best sales people, by the way, are building those relationships already organically in the local market. So again, not a huge change. But either new chief revenue officer comes in, he comes with a career's worth of experience, dealing with multi-channel direct and interrelated distribution, opportunity and the challenges that comes with managing multiple channels.
David Michael Grossman: is around the brokerage channel. And again, as we sort of invest in the data, the analytics, the innovation that we can bring around benefits.
David Michael Grossman: That's a very, very big part of the market where employee benefits brokers have influence. And our best salespeople, by the way, are building those relationships already organically in local markets. So again, not a huge change.
Mike Simonds: But as our new Chief Revenue Officer comes in, he comes with a career's worth of experience dealing with multi-channel direct and intermediated distribution opportunities and the challenges that come with managing multiple channels. So we're pretty excited, not again about changing our focus, but adding to it, putting the processes, the technology, the tools, the corporate level partnerships in place. It will take a little bit of time.
Speaker Change: But as our new Chief Revenue Officer comes in, he comes with a career's worth of experience dealing with multi-channel, direct, and intermediated distribution, opportunity, and the challenges that come with managing multiple
Mike Simonds: So I'm pretty excited not to get about changing our focus, but adding to it, putting the process of the technology, the tools, the corporate level partnerships in place. It will take a little bit of time. It doesn't happen overnight, but I think we can go on some momentum that we've already started to establish there. So hopefully that helps.
David Michael Grossman: channels. So we're pretty excited, not again about changing our focus, but adding to it, putting the processes, the technology, the tools, the corporate level partnerships in place.
Mike Simonds: It won't happen overnight, but I think we can build on some momentum that we've already started to establish there. So hopefully, that helps. Yeah, no, thank you for that. And Kelly, just a couple of quick cleanup questions on the numbers. Is the only adjustment to make to the WSC count sequentially just the 18,300 platform users, or are there any other adjustments to make to that number? No, not at all, David.
David Michael Grossman: It will take a little bit of time, it doesn't happen overnight, but I think we can build on some momentum that we've already started to establish there. So hopefully that helps, David.
Kelly Tuminelli: Yeah, no, thank you for that. And Kelly, just a couple of quick cleanup questions on the numbers. Is the only adjustment to make to the WSC counts sequentially just the 18,300 platform users, or are there any other adjustments to make to that number? No, not at all, David. And we do break those out in the TNQ that was filed this morning. So, hopefully, you've got some transparency on the difference between the co-employed and the platform users. Right. So you were up basically, you know, a little less than a point sequentially, and the CIE hiring, the modest hiring is what, because you've been down sequentially for, you know, five or six quarters, something like that.
David Michael Grossman: Yeah, no, thank you for that. And Kelly, just a couple of quick cleanup questions on the numbers.
David Michael Grossman: Is the only adjustment to make to the WSC count sequentially just the 18,300 platform users, or are there any other adjustments to make to that number?
Kelly Lee Tuminelli: We do break those out in the 10 Q that was filed this morning, so hopefully, you've got full transparency on the difference between the co-employed and the platform. Right, so you're up basically, you know, a little less than a point sequentially, and the CIE hiring, the modest hiring is what because you've been down sequentially for, you know, I don't know, five or six quarters, something like that. And so the first sequential growth after making that adjustment, right, just to be clear. Well, and the other thing to point out is just super strong retention.
Kelly Lee Tuminelli: No, not at all, David. And we do break those out in the 10Q that was filed this morning, so hopefully you've got some transparency on the difference between the co-employed and the platform users.
Speaker Change: Right, so you're up basically, you know, a little less than a point sequentially, and the CIE hiring, the modest hiring, is what, because you've been down sequentially for, you know, I don't know, five or six quarters, something like that.
Kelly Tuminelli: And so the first sequential growth, after making that adjustment, right, just to be clear.
Speaker Change: And so the first sequential growth after making that adjustment, right? Just to be clear.
Kelly Tuminelli: The other thing to point out is just super strung retention. So, you know, I think as we looked at, obviously, most of our attrition occurs in the first order. And Mike talked about, you know, how we're trying to get sales to be able to offset the level of attrition on a quarterly basis, but I do think, you know, retention exceeded our expectations during the quarter and was a really strong showing. Their sales, you know, continue to contribute. And then the modest CIE just was helpful for that. Right. And just on the HCM users, you know, that was down sequentially.
Speaker Change: Well the other thing to point out is just super strong retention. So you know I think as we've looked at obviously most of our attrition occurs in the first quarter and Mike talked about you know how
Kelly Lee Tuminelli: So, you know, I think as we've looked at, obviously, most of our attrition occurs in the first quarter. And Mike talked about, you know, how We're trying to get sales to be able to offset the level of attrition on a quarterly basis, but I do think, you know, retention exceeded our expectations during the quarter and was a really strong showing that their sales, you know, continue to contribute. And then the modest CIE just was helpful for that.
Speaker Change: We're trying to get sales to be able to offset the level of attrition on a quarterly basis, but I do think, you know, retention exceeded our expectations during the quarter, and was a really strong showing there. Sales, you know, continue to contribute, and then the modest CIE just was helpful for that.
Kelly Lee Tuminelli: Right. And just on the HCM users, you know, that was down sequentially again. Is this still kind of cleansing the base, you know, the base, or is there other dynamics going on there that we should expect to continue throughout the balance of the year? Yeah, it's Mike. It's a really good question.
Speaker Change: Right. And just on the HCM users, you know, that was down sequentially again. Is this still kind of cleansing, you know, the base or is there other dynamics going on there that we should expect to continue throughout the balance of the year?
Kelly Tuminelli: Again, is this still kind of cleansing, you know, the base, or is there other dynamics going on there that we should expect to continue throughout the balance of the year? Yeah, it's my really good question.
Mike Simonds: And just to take one step back and say, we're really pleased with The primary objective of the acquisition was to bring in the technology and bring in the talent to help us really modernize and give us our own technology to be able to take forward. That's progressing really nicely. And actually, some of the early uses of the technology that we brought over to the broader business were around benefits and differentiating us in the market from a benefits point of view. A substantial amount of work and pipe around the payroll capacity as well.
Kelly Tuminelli: And just to pick one step back and say, we're really pleased with the sort of the primary objective of the acquisition was, which is to bring in the technology and bring in the talent to help us really modernizing, give us our own technology to be able to take forward. And that's progressing really nicely, and actually some of the early uses of the technology that we brought over to the broader business is around benefits and differentiating us in market for a benefit point, used substantial amount of work and pipe around the payroll capacity as well. So that's a really important part of the plan for trying that going forward.
Speaker Change: Yeah, it's Mike. It's a really good question and just to take one step back and say we're really pleased with...
Speaker Change: The primary objective of the acquisition was to bring in the technology and bring in the talent to help us really modernize and give us our own technology to be able to take forward.
Speaker Change: That's progressing really nicely and actually some of the early uses of the technology that we brought over to the broader business is around benefits and differentiating us in market from a benefits point of view, substantial amount of work and pipe around.
Mike Simonds: So that's a really important part of the plan for TriNet going forward. We're doing it, like you said, now on a margin positive basis, having taken the disciplined action around expenses and around pricing. I think on the price front, that'll continue as we work through it. The third piece is around, okay, what's the growth outlook for this business? And we're certainly looking at the software and services and the capabilities there as part of the strategic review that we're looking at.
Speaker Change: The payroll capacity as well. So I think that is a really important part of the plan for TriNet going forward.
Kelly Tuminelli: We're doing it. Like you said, now on a margin-positive basis having taken the discipline to action around expenses and around pricing. I think on the price point that will continue as we work through it.
Speaker Change: They're doing it, like you said, now on a margin-positive basis, having taken the discipline to action around expenses and around pricing. I think on the price front, that'll continue as we work through it.
Kelly Tuminelli: The third piece is around, okay, what's the growth outlook for this business, and we're certainly looking at the software and services and the capabilities there as part of the strategic review that we're looking at. And you can count on from us is that the choices that we make ultimately the businesses that we're going to really invest and get behind. Those are going to be things that are going to be uniquely impactful to our PNL. So I'm pretty excited about the capabilities that we've got here with that part of our business and doing it on a margin-positive basis.
Speaker Change: The third piece is around, okay, what's the growth outlook for this business, and we're certainly looking at the software and services and the capabilities there as part of the strategic review that we're looking at.
Mike Simonds: And you can count on us that the choices that we make ultimately, the businesses that we're going to really invest in and get behind, those are going to be things that are going to be meaningfully impactful to our P&L. And so I'm pretty excited about the capabilities that we've got here with that part of our business and doing it on a margin positive basis. And then I think we've got to figure out the best path to grow.
Speaker Change: you can count on from us is that the choices that we make ultimately, the businesses that we're going to really invest and get behind, those are going to be things that are going to be...
Speaker Change: Michael Simonds, Mike Simonds, Burton Goldfield
Kelly Tuminelli: And then I think to figure out the best path to growth.
David Michael Grossman: Got it. Okay, guys. Good luck. Thank you. Thank you, David.
Kelly Tuminelli: Okay, guys, good luck. Thank you.
Speaker Change: Got it. Okay, guys. Good luck. Thank you.
Operator: Thank you, and this does conclude the question and answer session. I would like to turn the conference over to Mike Simonds, CEO, for any closing remarks. Okay, thanks everyone for joining us this morning. We, as always, appreciate your engagement. I know Kelly, Alex, and I will look forward to the continued dialogue over the coming weeks and months.
Operator: And this doesn't code the question in the next session.
Eamon: Thank you, Eamon.
Mike Simonds: I would like to turn the conference over to Mike Simon, CEO, for a closing. comments. Okay, thanks everyone for joining us this morning. We, as always, appreciate your engagement, and though Kelly, Alex, and I will look forward to the continued dialogue over the coming weeks and months. So, everyone has a good rest of your day, Keith.
Eamon: Thank you. And this does conclude the question and answer session. I would like to turn the conference over to Mike Simonds, CEO , for any closing comments.
Mike Simonds: So, hope everyone has a good rest of their day. Keith, this concludes our conference call, and thanks for your help today. Thank you. Thank you, and, as mentioned, the conference has now concluded. Thank you for attending today's presentation, and we now disconnect.
Mike Simonds: Okay, thanks everyone for joining us this morning. We as always appreciate your engagement. I know Kelly, Alex, and I will look forward to the continued dialogue over the coming weeks and months. So, hope everyone has a good rest of your day. Keith, this concludes our conference call and thanks for your help today.
Operator: This concludes our office call, and thanks for your help today. Thank you.
Operator: And, as mentioned, the conference has all concluded. Thank you for presenting today's presentation, and we're now just going to
Keith: Thank you. Thank you. And as mentioned, the conference has now concluded. Thank you for attending today's presentation, and we now disconnect your lines.