TNET

Image source: The Motley Fool. Thursday, July 30, 2026 at 8:30 a.m. ET Head of Investor Relations - Alex Bauer President and CEO - Mike Simonds CFO - Mala Murthy Operator: Good day, and welcome to the TriNet's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Alex Bauer, Head of Investor Relations. Please go ahead. Alex Bauer: Thank you, operator. Good morning. My name is Alex Bauer, TriNet's Head of Investor Relations. Thank you for joining us, and welcome to TriNet's Second Quarter Conference Call and Webcast. I'm joined today by our President and CEO, Mike Simonds; and our CFO, Mala Murthy. Before we begin, I would like to preview this morning's call. First, I will pass the call to Mike for his comments regarding our second quarter performance. Mala will then review our Q2 financial performance in greater detail and comment on our 2026 financial guidance and outlook. Please note that today's discussion will include our 2026 full year financial outlook and other statements that are not historical in nature or predictive in nature or depend upon or refer to future events or conditions such as our expectations, estimates, predictions, strategies, beliefs or other statements that might be considered forward-looking. These forward-looking statements are based on management's current expectations and assumptions and are inherently subject to risks, uncertainties and changes in circumstances that are difficult to predict and that may cause actual results to differ materially from statements being made today or in the future. Except as may be required by law, we do not undertake to update any of these statements in light of new information, future events or otherwise. We encourage you to review our most recent public filings with the SEC, including our 10-K and 10-Q filings for a more detailed discussion of the risks, uncertainties and changes in circumstances that may affect our future results or the market price for our stock. In addition, our discussion today will include non-GAAP financial measures, including our forward-looking guidance for adjusted EBITDA and adjusted net income per diluted share. For reconciliations of our non-GAAP financial measures to our GAAP financial results, please see our earnings release, 10-Q filings or our 10-K filing, which are available on our website or through the SEC website. With that, I will turn the call over to Mike. Mike? Michael Simonds: Thank you, Alex, and thank you all for joining us. At the midpoint of 2026, I'm pleased with the progress we've made on our priorities. We kept our focus on our customers and executing our strategy, resulting in higher retention, increasing sales momentum, prudent expense management and improved earnings performance positioning us to raise our full year earnings outlook. While the operating environment remains challenging, the team is striking the right balance on two important fronts. First, as we previewed last quarter, our health fee pricing work over the previous 18 months positioned us to renew customers at rates more closely aligned with market trends going forward. We saw the benefit in Q2 with a balanced combination of insurance performance and significantly improved customer retention. Second, I'm encouraged by the balance we are achieving in continuing to invest meaningfully in growth and client service initiatives while also managing expenses prudently. Looking forward to the second half, we believe TriNet is well positioned for continued improvement in operating and financial performance. We've made good progress on our margins and operating fundamentals. We're now increasingly focused on realizing value from our growth-oriented investments. TriNet's path to sustainable growth will start with revenue growth as pricing outpaces a slowing rate of WSE volume decline. Then WSE volumes will stabilize and begin to grow driven by further improvements in retention paired with new sales increases. Starting with pricing. We now have our insurance cost ratio back in our targeted range and we'll continue to renew business, assuming the elevated high single-digit trend being felt across the market persistent. With our pricing more in line with market trends, our service proposition is becoming the biggest determinant as to whether our SMB clients stay with TriNet and continuing to improve our retention rates is our second key to reestablishing growth. Our primary KPI for customer service is the Net Promoter Score, and I'm pleased to report that in Q2, we remained at much improved levels continuing to trend from last quarter. Overall, attrition in the quarter improved by 36% year-over-year. Importantly, when we break this down to look at the drivers, we saw a 58% year-over-year decrease in attrition related to health fee pricing and a 47% year-over-year decrease in attrition related to service. We are encouraged by these improvements as our goal is to achieve and sustain long-term retention at rates several points higher than our historical experience of about 80%. Success in our view, requires pairing our people with industry-leading technology. AI and HR is most valuable when combined with judgment rooted in deep domain expertise and a strong service orientation, long-standing TriNet strength. On this score, we're pleased with the performance of TriNet Assistant since its launch this spring. This AI capability is both delivering a strong improvement in our customer experience and freeing up capacity for our teams to focus on higher-value work. Thus far, 50% of customer-initiated chat sessions have been addressed through TriNet Assistant, resulting in lower service case volumes for our colleagues. These chat sessions include benefits, payroll and other workforce management-related inquiries. Moreover, customer satisfaction with TriNet Assistant is strong and highlights growing trust with the experience. TriNet Assistant is just one of several exciting AI projects designed to improve our customer experience, manage costs and fuel our growth. We'll share more as these initiatives move into production. A second important investment in our client experience is our acquisition of Cocoon. Leave of absence has been a significant compliance and employee experience pain point for our customers and the broader SMB market. And with Cocoon we addressed it with a best-in-class solution. I'm pleased to report that our integration is on track. Our first cohort of customers has migrated to the solution. Our second and third cohorts are expected to be completed by year-end which leads us prepared to onboard new PEO customers during our busiest time in January. The third ingredient in achieving sustainable growth is new sales. In the second quarter, sales ended flat year-over-year with sequential improvement through the quarter. The challenges we encountered in March persisted into April before abating. Sales momentum has returned, leaving us encouraged as we look forward. We outlined several initiatives at the start of the year designed to improve our distribution and further differentiate our benefits offering, and we've made meaningful progress on both fronts. First, we're doing a better job retaining our most experienced sales consultants. The total number of reps with more than 4 years of experience is up 7% year-over-year. As we've discussed, senior reps are our most productive, and we've seen that become even more true over time. The productivity of our senior reps improved by 13% year-over-year in Q2, and on average, they were 5x more productive than our first-year reps, retaining and growing our senior reps is critical. Over the next 2 years, we expect this group to grow further as successful Level 2 and 3 reps graduate into their ranks. We created our ASCEND program to build a repeatable means of hiring, training and retaining sales professionals feeding a much higher percentage of them into our senior rep ranks than was the case through our historical approaches. Our first ASCEND class of just over 20 reps moves into production in Q3 and as we have expanded our ASCEND program nationally, over 100 new reps have been hired into the program. We expect to send cohorts to graduate quarterly into production throughout 2027 and form the primary means by which we build a strong culture and sustainable sales talent factory. During 2025, we slowed our traditional hiring as we built out the ASCEND program. This resulted in an overall contraction of the sales force in the second half of 2025 and the first half of this year. With our new recruiting, selection and training motions now rolling new reps into production, we expect to show year-over-year increases in total sales consultants in the current quarter, and we expect to see this growth continue. Finishing the year with approximately 20% more sales consultants than we finished 2025. Like each element of our strategy, with our sales force, we focus on approaches that generate sustainable long-term improvement. We are heading into our busiest selling season with a sales force that has more experienced reps and is growing in absolute numbers as well. A second element of our distribution strategy is our broker channel, which continues to demonstrate growth. This channel expands our distribution through national broker partnerships with incentives for new sales and retention. At the end of Q2, the broker channel represented 32% of new sales with RFPs up a robust 54% year-over-year. While this channel is more competitive than direct sales, we believe that deeper broker partnerships should result in more broker-generated leads aligned with our target customers. Retention based incentives to brokers are critical for this alignment. Benefit brokers have deep expertise, and we know that benefits is a primary reason that our targeted clients come to the PEO business model. TriNet is uniquely positioned here given our national scale and ability to take and manage risk. As the fall selling season comes into focus, our insurance services team has introduced innovations to our health plan offering. First, we expanded our benefits plan library to cover a wider array of price points and invested in AI to match client needs around coverage and cost with the appropriate set of bundled plan choices. These bundles will be in market for our fall selling season. Second, in July, we launched our enhanced health plan pricing engine, creating a more structured, responsive and scalable pricing model. We believe the new health plan pricing engine will improve proposal quality, speed and consistency, strengthening broker and seller confidence and leading to greater stability in pricing over time. The combination of benefits, investments and added distributions underpin our confidence in growing sales through the second half of 2026. In summary, we believe we are progressing well against our growth plan. At midyear, we are raising full year earnings guidance. Our health plan pricing is better aligned with market trends. Retention is improving and our focus on customer service, including the Cocoon integration and application of AI is delivering results. We are retaining our senior reps, expanding the sales force as our first ASCEND class joins the team entering the fall selling season with our benefits bundles and improved health plan pricing process. Our performance this year and our improved outlook reflects our disciplined execution and meaningful progress. Having completed much of the work required to stabilize the business, we are focused on driving returns from the growth investments we've made. As a final note, earlier this week, we announced that TriNet was recognized by time, Newsweek and U.S. News & World Report as a top workplace. We have asked a lot of our colleagues over the last 2 years, and this sort of recognition reflects our colleagues' dedication and our continued focus on building a strong culture. I know many of our colleagues are listening to this call, and I want to thank all of them for all they're doing to deliver these strong results and build our growth story in a high-quality and sustainable way. With that, I'd like to turn things over to Mala. Mala? Mala Murthy: Thank you, Mike. I'm pleased with TriNet's second quarter execution, which was characterized by disciplined pricing, better-than-expected insurance results improved retention, prudent cost management and solid financial results. Our focus remains on executing our strategy and returning our business to top line growth. With that, let's dive into our second quarter financial performance. Total revenues were $1.2 billion, declining 5% year-over-year in the second quarter impacted by lower WSE volumes when compared to last year, offset in part by insurance and professional service revenue pricing. Q2 total revenues reflect the impact of our first quarter repricing efforts. An impact we expect to feel throughout the year. Exiting Q1, our WSE count was modestly lower than originally forecast and as we exit Q2, we are realizing modestly better insurance performance. We finished the quarter with approximately 300,000 total WSEs, down 12% year-over-year and flat sequentially. As a reminder, total WSEs include platform users or those users who are accessing our platform as well as co-employed WSEs or those users receiving the full benefit of our PEO services. We ended the second quarter with approximately 274,000 total co-employed WSEs down 11%, largely due to the cumulative impact of our repricing actions in the first quarter. Our full year retention forecast remains on track and we expect to see year-over-year retention improve through the second half. On CIE, historically, the second quarter is our strongest quarter. This year, we saw customer hiring consistent with what we saw last year and in line with our forecast. CIE didn't move backwards in the quarter, but we have yet to see it accelerate. Professional services revenue in the second quarter was $159 million, declining 8% but outperforming our forecast. Professional service revenue continues to be impacted by lower co-employed WSEs. The out-performance relative to our forecast was due to firm pricing continued favorability in our reporting methodology for state tax-related revenue and revenue from Cocoon. ASO continued to perform in line with expectations. Interest revenue in the second quarter was $12 million, a decline of 33% versus the prior year and in line with our forecast. As in the first quarter, the expected reduction of cash balances for certain tax credits drove the decline, consistent with our initial interest revenue guidance for the year. Turning to Q2 insurance services performance. Insurance service revenues declined 4%, primarily driven by lower overall WSEs offset by pricing. Insurance costs declined by 8% year-over-year. As a result, our second quarter insurance cost ratio came in at 86%, a 4-point year-over-year improvement. In the quarter, we saw health cost trends stabilize in the high single digits, slightly favorable to our forecast and in line with broader trends. In the quarter, we realized fewer inpatient procedures than forecast, and we experienced lower pharma cost inflation than expected. On pharma costs, the adoption of biosimilars such as for HUMIRA and STELARA and the stabilization of GLP-1 usage kept cost inflation lower than forecast. We do not view our lower pharma cost inflation as a change in trend given the probable future introduction of high-cost drugs. Given how we've managed our risk over the last year, we realized approximately two points of year-over-year improvement in insurance cost ratio from favorable prior year development, just as we did in the first quarter. The other two points of our year-over-year improvement was due to the recovery of previously expensed insurance administrative costs incurred in the previous decade. This onetime benefit was a small part of a larger recovery to which we were one of many recipients. In the second quarter, operating expenses, which exclude insurance cost and interest expense, declined by 1% year-over-year. Expenses in the quarter included incremental Cocoon costs as well as other personnel-related expenses. With our improved earnings in the first half, we have an opportunity to strategically invest in growth and efficiency. In the second half, we are accelerating investments into three broad buckets: our distribution efforts, our benefits offerings and our service model. These investments will incorporate AI throughout. Most of this incremental spend is slated for the current fiscal year. Turning to earnings. Second quarter GAAP earnings per diluted share were $1.15 and adjusted net income per diluted share was $1.55. Our business remains a strong cash-generative business, which supports our investment priorities and business execution. During the second quarter, we generated $128 million in adjusted EBITDA, representing an adjusted EBITDA margin of 10.9%. We generated $88 million in net cash provided by operating activities and grew free cash flow by 18% to $67 million. Free cash flow benefited from disciplined expense management and better than forecast insurance performance. Our capital priorities remain reinvesting in our business for growth, M&A and returning capital to shareholders via share repurchases and dividends. In the second quarter, we leveraged our cash generation to return $31 million to shareholders across share repurchases and dividends. We repurchased approximately 500,000 shares for $18 million and we paid a $0.29 dividend in the quarter. Turning to our 2026 outlook. We are adjusting our full year guidance to reflect our first half performance and updated 2026 forecast. For total revenues, we are currently trending at or slightly below the midpoint of our current guidance range, primarily due to lower insurance service revenues. Professional service revenue guidance is being raised, reflecting our stronger than forecast performance. Given the out-performance of insurance costs in the first half, we are improving our ICR range and raising both our adjusted EBITDA margin and earnings per share ranges. The improved ICR range includes most of the first half favorability including our onetime recovery benefit. In the second half, we expect normal ICR seasonality, which means second half ICR should be higher than the first half driven by utilization patterns, deductibles being met and pooling limit resets. While they have moved beyond our difficult yet necessary repricing efforts, health cost trends remain persistently high. As such, we will continue to price in the aggregate, targeting the high end of our long-term 87% (sic) [ 86% ] to 90% ICR range. For 2026, Total revenues remain in the range of $4.75 billion to $4.9 billion, while our professional services revenue range is raised to $647 million to $663 million. We are improving our ICR range lower to 89.5% to 88.5%. Our adjusted EBITDA margin range is being raised to 8.5% to 9%. GAAP earnings per diluted share are now in the range of $2.85 to $3.35, with adjusted earnings per diluted share raised to a range of $4.50 to $5.10. I'm encouraged by our second quarter results and the ongoing execution of our plan. We remain disciplined with our pricing as we navigate persistently high medical inflation and continue to make progress on our key strategic priorities. Our year-to-date financial performance has enabled us to raise our full year guidance. We remain prudent with our investments while expanding margins year-over-year. And we believe we are better positioned for the second half. With that, I will pass the call to the operator for Q&A. Operator: [Operator Instructions] The first question comes from Jared Levine with TD Cowen. Jared Levine: To start, Mike, I wanted to dig into in terms of the flat sales growth in Q2 despite some of the improvements in both productivity and I guess, retention of the most experienced sales reps there. I guess what drives the confidence to return to sales growth in the second half of the year here? Is that more so growth of the remaining base? Or I guess, some additional increases in productivity or headcount on that most experienced tenured cohort there. That would be great. Michael Simonds: Thanks for the question. And we mentioned the -- we saw sort of decisioning get elongated at the -- and we talked about that with sort of the tail end of the first quarter, and that sort of persisted into the first part of the second quarter. And we've seen sequential month-over-month improvement as we work our way through 2Q and just kind of sitting here in July, encouraged with the results here, too. So it feels like to sort of see the momentum emerging. To your point, it is good to see kind of our total rep staffing number inflect here again, where we sit in July and be back into growing that total number going forward. And the other piece, I think, I just would highlight again is the growth in the broker channel has been very encouraging for us. So that's been a driver of this emerging momentum. So if you look at it in terms of the pipeline, at the end of 1Q, we talked about a 12% year-over-year increase in broker-driven RFPs now that's up over 50% growth as we close out 2Q in terms of the number of RFPs. So, there's just a number of factors, these investments that we've been making in the ASCEND program, the staffing program, retaining senior reps, getting the broker channel going that sort of gives us a lot of confidence that the full year growth that we talked about in sales is still absolutely our target and expectation and that material here in the second half. Jared Levine: Got it. And then I wanted to dig into the updated ICR guidance here. So at the midpoint of the range, if I kind of look at the second half, it doesn't seem to suggest any improvement year-on-year. I guess I would have expected some improvement just due to the repricing effort. So are there any kind of onetime impacts in the second half that we should be aware of in terms of that comp? Or maybe is this just an element of conservatism? I guess, can you kind of help us understand kind of why that second half doesn't seem to suggest any improvement year-on-year on that ICR? Mala Murthy: Yes. Thank you for the question. If I think about our ICR trajectory through the year. Just let's start with the fact that we have seen significant out-performance in ICR year-to-date, both in Q1 and Q2, as we said in our prepared remarks. We've talked about the drivers of the Q2 out-performance year-over-year, 4.2 of which is prior period development capability. The second is a onetime item. We've also talked about the fact that if you look at medical trends at this moment in time, they are persistently high. Now we are seeing slight favorability in our book relative to what we had previously assumed when we set guidance. But I would say the trends remain in the high single digits as we have shared all along. So with that as a background, if I now think about the second half, there are a few things that are informing our guidance. The first is our historical experience does suggest that we could see some lumpiness and volatility in our claims experience in the second half. And we are essentially factoring that in as we think about the guidance range. Recognize the guidance range, if you look at the change in guidance and anchor to the more favorable end of the guidance, that essentially accounts for a lot of the year-to-date capabilities that we have seen. The other thing I would just remind you and everyone is we do see second half seasonality in ICR, and we expect to see that this year as well. And that is essentially based on utilization factors, the fact that deductibles are being met, pooling limit resets, all of that, we expect to see this year as well. So that's sort of informing all of -- we have put all of that into our guidance as we have thought about our new updated improved guidance. Operator: The next question comes from David Grossman with Stifel. Unknown Analyst: This is [indiscernible] for David Grossman, Mike, maybe one for you. Now that you've had some time to implement your go-to-market changes, and they're beginning to take shape, specifically in the broker channel. What's resonating most with the brokers and leading to this kind of increase in RFPs? And yes. I guess let's just start with that. Michael Simonds: Thanks for the question. And we are encouraged with the growth in the channel for really two reasons. One is the results that are emerging and the second is just the potential. So as we look at sort of where the RFPs are coming from and the amount of production on individual kind of local broker basis. We know we're in a lot of ways just sort of beginning to scratch the surface a potential. And we talked about this 2 years ago, PEO is an under-penetrated market, but SMBs that get health care, 90% plus of them get it through health insurance brokers. So what's resonating. I think it's boringly simple, but it's making sure that we put the right talent at the local level matched with the right broker producers, hence the need to sort of retain our senior people that you've got to meet expertise with expertise. We've redesigned processes to make sure we're giving trusted adviser access to brokers as our standard operating procedure and including them in renewal discussions. It's making sure that you're putting dedicated client service personnel against not just customer by customer, but the broker block overall. So there's no one factor, but it's really sort of thinking about the life cycle from prospecting quoting, all the way through renewing a book of business where you're trying to really show up as a partner for these firms. Unknown Analyst: Great. And then just a follow-up on the retention you guys are seeing with total WSEs roughly flat sequentially and the improvement in retention, when should we expect kind of the WSE growth to start to trend positively? I know you said stabilized and then turn positive. And then when a client does decide to leave where are they typically going? Is it getting brought in-house and a different solution. But if you could give some insight there, that would be great. Michael Simonds: Yes, sure. I do think we've got good evidence here in 2Q on the progress we've made in putting a really firm foundation in place, getting like Mala was saying, the ICR back into our targeted range. Seeing retention increase nicely here in the second quarter, having our NPS at a stable and a really positive spot. So that firm foundation, I think, is really important to us. And our next sort of mile markers revenue growth. So as this retention is improving, it slows the rate of decline in the WSEs. We continue to price as Mala said, for that high single-digit market-wide health care cost trend and that -- those pricing actions outpaced the WSE decline and the net is revenue growth. And so we can sort of see our way to that the next mile marker and then following that, to your specific question is like, okay, now as we're capturing the full value of the growth investments that we talked about in the distribution, both our reps and channel in our benefits offering in our service proposition, the sum total of those investments is what turns the corner on the WSE growth. And we're not in a spot like today to try to pinpoint the exact timing of that. But in terms of like the next couple of mile markers, it feels like quite comfortable there. To where do they go? I mean, I think I've talked a little bit in the prepared remarks, it is very encouraging to see the health care reason, which typically means they're leaving us due to health care pricing. They're very often going into an open market solution of some type. That as a reason is coming down. Also service as the reason for departure is coming down as we continue to invest in the NPS results that we're generating. I don't see any dramatic changes in the competitive landscape. We have a good robust set of competitors out there. But in general, if it's health care, they're very often ending up in open market solutions and multi-vendor. If it's a service related, that's where we might lose to another competitor. Operator: The next question comes from Tobey Sommer with Truist. Tyler Barishaw: This is Tyler Barishaw for Tobey. Sticking with the WSE growth, saw some slight improvement in the year-over-year rate in the quarter. How should we think about it in the second half? Should we expect a similar slight improvement on a year-over-year basis? Mala Murthy: Yes. What I would say is, we said this in our prepared remarks, I would expect in the second half, a couple of things to happen, we do expect retention to improve on a year-over-year basis as we traverse through the second half. We saw that in Q2, and we expect to continue to see that as we go through the year. And then the second thing I would say is, as Mike has elaborated in his prepared remarks, we are also looking for new sales to ramp as we go through the second half. So if you think about the drivers that are informing sort of behind your question, I would look for those two as we think about our WSE trajectory in the second half. Operator: The next question comes from Kyle Peterson with Needham & Company. Kyle Peterson: Great. I wanted to start out on the ASO progress. It sounds like that is going well. But I guess maybe just a quick update, how is that progressing relative to plan? And any other feedback or thoughts on the traction you guys are seeing there so far? Michael Simonds: Yes, absolutely. The ASO product is one we're quite excited about. And good to see continued double-digit growth here in the quarter. As we talked about, it's a relatively small business in the scheme of things that we're looking to grow. I would say it also presents a great opportunity for us to be thinking about innovation and where can we take different approaches to that market. So we're excited about the growth, I would say, equally excited about what we're learning in that market and how we can apply that learning to some different approaches over time. But yes, it remains something that we're quite focused on. Mala Murthy: One other thing, when we had given our guidance at the beginning of the year, what we had talked about was a net headwind to our 2026 guidance in the range of $10 million to $15 million. As of now, we are tracking towards the more favorable end of that range. Kyle Peterson: Okay. Great. That is very helpful. And then as a follow-up, I wanted to dig a little more into the insurance profitability. Good to see the quarter and the outlook better. I guess kind impact. It sounds like some of the things that have been timing driven with some the inpatient procedures being down and it sounds like you guys are expecting kind of pharma costs not to, I guess, stay below forecast. So I guess, how should we think about like how much of an impact was potential timing this quarter versus anything better in the core that would be maybe a little more sustainable moving forward? Mala Murthy: Yes. Yes. I would not characterize the favorability that we have seen in our performance both in the quarter and year-to-date as timing. What drove our improvement in cost ratio year-over-year and as well as versus our expectations is really two things. One is the onetime benefit that we spoke about in our prepared remarks, that was about half of our year-over-year improvement. The other one really is prior year development favorability. And what I would say on that one is it's just really important to understand what that means. The way we work our insurance book is we monitor prior period development in our medical reserves as an indicator of emerging cost trends. And in recent quarters, claims have developed more favorably, slightly more favorably than we had initially expected, and that obviously suggests that the underlying health care cost growth has been moderating relative to the assumptions that we had embedded when we built up our reserves. So the important point is the favorable emergence that we are seeing behind the prior period development is consistent with the stabilization in health care cost trends. And I wanted to elaborate on this because what's important is the stabilization. It's still high. Let's not forget that it's still in the high single digits, but it is stable. And so that is not timing. It is a trend. Operator: The next question comes from Brendan Biles with JPMorgan. Brendan Biles: Excited to hear all the talk about sales and selling motion. Two kind of quick questions on that. First of all, how are you retaining the sales folks, the high-performing sales folks for longer I think that's a great development, how sustainable is that? And then lastly, looking back on the fall selling season, kind of like premortem, what metrics are you going to use to define success? And how will you know that it's a very successful fall selling season here? Michael Simonds: Brendan, thanks for the question. On the retention of senior reps, I think pretty straightforward. One is making it a focus looking at things like incentives for sure, again, looking back probably 18 months ago, I think the revenue leadership team has done a very good job in investing in the front line and regional management teams and improving them as leaders and building a stronger culture there. I think a lot of it is also making sure that we're providing good tools and good support. We spent a lot of time talking about how do you pull sales friction out of the process. We're really looking at that entire life cycle and saying, where can we improve our tooling, where can we make things easier where can we provide a second set of hand and for that, one of the exciting things that the team has done is as we're bringing new people into the ASCEND program, they are assigned out to senior reps. And so obviously, there's the mentorship advantage to the junior people, but it also means that our ASCEND folks are right there to help, and to take some of the administrative work and keep prospects moving through the pipeline for the senior folks. So there nice symbiotic relationship that's developed there. So again, a lot of little things that contribute to just being able to tell a compelling story about why this is a fantastic place to build a sales career. And then in terms of success in the second half, for us, it's showing good strong year-over-year growth, which again is what we're anticipating here as we look at the pipeline and look at the investments that we've made in it. We would love to continue to see the acceleration on the broker side. As our sales reps staffing in total and some of the newer reps are rolling out into production, we were very much targeting growth in our direct channel, which remains our primary go-to-market motion as well. So those are some of the things we're looking at. Operator: The next question comes from Kevin McVeigh with UBS. Kevin McVeigh: Great. I'll add my congratulations as well. I guess -- how are you thinking about, Mike, I guess, two things. It seems like the broker channel is going to more influence the revenue trajectory, if that's right? Help us understand where that's been historically, what you expect it to be in terms of contribution? And then with that, remind us what's the profitability of a new client as opposed to existing? Michael Simonds: Great. And just to clarify, Kevin, is that last of broker versus direct question? Or are you saying -- or the question is just more like what's the first year of profitability for any channel? Kevin McVeigh: Any channel. You've got a sales commission in there and stuff like that. So I think at this point being, you're going to see some nice momentum as that attrition improves initially, and then just how you're thinking about that? Michael Simonds: Yes. No, that makes great sense. So thinking of [ tied ] rough terms, about 1/3 of our new business coming in year-to-date is through the brokerage channel and that's growing. I would expect as the staffing clicks in -- we're making some targeted investments here in marketing to support as direct starts to move again in the right direction. I would expect that direct will remain more than half of how we're acquiring you clients over the medium term as far as we can see. But again, think about it in terms of the mix at about 1/3 broker. Yes, the business model is one where profitability builds with tenure, and that's both because of the cost of acquisition but then when you're a risk-taking PEO like we are, the reality it is, you're going to understand that risk a lot better and once you've been through, say, two renewal -- annual renewal cycles on the insurance products, that's going to put us in a much better place in terms of getting that price lined up really well with the risk. So it really underscores why retention is so important, not only in driving volume growth, but in terms of the margins we're targeting in the business. Kevin McVeigh: That makes a ton of sense. And then I guess, Mike, if you can say whether next question when you think about AI within the organization, right, we can't do a call without talking about AI. But are you leveraging that to get better intelligence on existing clients? Do you think -- when you think about AI fully implemented, if it slows the WSE growth, which it might, I don't know if it will or not, there's probably offset maybe pricing maybe it's new plans. But how are you thinking about it as you implement it internally, both from a revenue perspective as well as from an expense? Michael Simonds: Yes. Well, 6 question in before AI hit, Kevin. So that's good. I think the -- what we're very excited about. I'll give you a very good simple use case. And so what our data and analytics team has done is built what we call a customer health score. And what that does is it uses AI to monitor every single interaction that we have with anyone inside of any one particular client. And what we do is based on the sentiment of the type of transaction or service order, it helps us kind of aggregate that into a collective score which not surprising correlates really well to what ultimately would be the NPS and the retention. So what AI is increasingly doing is enabling us to take all this what sort of transactional information and aggregated up to being a lot smarter and proactive in how we manage that client base. And ultimately, that helps us do a better job for our clients. It helps us drive up that NPS and drive up retention, which is a big revenue driver for us. So whether it's helping our service teams be on the front foot, more proactive to drive retention, whether it's the AI that we're using to select the right health care bundle in the fall selling season based on client preferences or whether it's TriNet Assistant that's helping today largely our WSEs get answers to their questions any time day or night. It's -- we're actually really, really excited about the impact that it can have, first and foremost, on us doing a better job for our clients, second growth and certainly there's efficiency gains, too. Kevin McVeigh: Just a quick follow-up on these points. Is it affording the opportunity to make better decisions in terms of client selection upfront? Michael Simonds: Yes, I would say that we're playing with some things on that front. I wouldn't look at you and say, hey, the new business that we're writing today is materially informed based on sort of insights driven by AI, but I think that's very possible use case for us down the road. Mala Murthy: I do believe that the use of AI that we have in our sales motion we are giving tools to our salespeople when they are prospecting to be better informed about the clients that they are going after. And that makes them more effective and ultimately will result in a better win rate. So it has those kinds of ancillary benefits and we are going to invest more into tools like that. Just talked about use of AI in our benefits bundle. If you think about our use of AI on the customer service side, we've talked in our prepared remarks about TriNet's Assistant. What's exciting about that is it actually allows us to up-skill our colleagues on the service delivery side because a lot of the calls are now being handled through TriNet's Assistant. So it all has direct and many indirect impacts, if you will, on revenue and efficiency and importantly, NPS. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mike Simonds for any closing remarks. Michael Simonds: Thanks, everybody, for joining today. Mala and I look forward to continuing the dialogue in person in many cases, over the coming weeks. And with that, Megan, we can conclude today's call. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in TriNet Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and TriNet Group wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. TriNet (TNET) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

In the past quarter, TriNet Group, Inc. reported second-quarter 2026 revenue of US$1,178 million versus US$1,238 million a year earlier, while net income increased to US$53 million from US$37 million, lifting diluted earnings per share from continuing operations to US$1.15 from US$0.77. Despite lower revenue over both the quarter and first half of 2026, TriNet delivered higher earnings and raised its full-year 2026 guidance to total revenue of US$4.75–4.90 billion and diluted net income per share of US$2.85–3.35, underpinned by improved insurance performance, lower customer attrition, and cost control. We’ll now examine how TriNet’s upgraded 2026 earnings guidance, driven by better insurance economics, affects the company’s existing investment narrative. The latest GPUs need a type of rare earth metal called Terbium and there are only 29 companies in the world exploring or producing it. Find the list for free. To own TriNet, you need to believe in the durability of its outsourced HR model for small and mid-sized businesses and its ability to manage insurance risk and costs. The key short term catalyst is whether improved insurance performance and lower customer attrition can translate into steadier earnings despite softer revenue. The biggest risk remains pressure on client hiring and worksite employee volumes. This quarter’s higher earnings but lower revenue do not fully resolve that concern. The most relevant recent announcement is TriNet’s raised 2026 earnings guidance to diluted net income per share of US$2.85 to US$3.35 on revenue of US$4,750 million to US$4,900 million. That upgrade, coming alongside improved insurance economics and tighter cost control, reinforces the near term earnings catalyst but still sits against longer running questions about client growth, fee sensitivity to healthcare costs, and competition from other HR and PEO models. Yet beneath the upgraded earnings guidance, there is a risk investors should be aware of around client workforce trends and... Read the full narrative on TriNet Group (it's free!) TriNet Group's narrative projects $5.0 billion revenue and $177.1 million earnings by 2029. This requires 1.1% yearly revenue growth and a roughly $18.1 million earnings increase from $159.0 million today. Uncover how TriNet Group's forecasts yield a $56.20 fair value, a 15% downside to its current price. Some of the lowest ranked analysts were already cautious, assuming revenue of about US$5.1 billion and earnings near US$210 million by 2029, and their concerns around declining worksite employee volumes and healthcare cost pressure could look different after this insurance driven guidance raise, which is why it is worth weighing several viewpoints before you decide what this quarter really means. Explore 2 other fair value estimates on TriNet Group - why the stock might be worth over 2x more than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your TriNet Group research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision. Our free TriNet Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate TriNet Group's overall financial health at a glance. Every day counts. These free picks are already gaining attention. See them before the crowd does: Explore 26 top quantum computing companies leading the revolution in next-gen technology and shaping the future with breakthroughs in quantum algorithms, superconducting qubits, and cutting-edge research. Invest in the nuclear renaissance through our list of 88 elite nuclear energy infrastructure plays powering the global AI revolution. Find 55 companies with promising cash flow potential yet trading below their fair value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TNET. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Interested in TriNet Group, Inc.? Here are five stocks we like better. TriNet raised its 2026 earnings outlook after improved insurance performance and cost management. Adjusted diluted EPS guidance increased to $4.50–$5.10, while adjusted EBITDA margin guidance rose to 8.5%–9%. Second-quarter revenue fell 5% year over year to $1.2 billion as total worksite employees declined 12% to about 300,000. However, customer attrition improved 36%, and the insurance cost ratio improved to 86%. TriNet is investing in growth through an expanded sales force, broker partnerships, AI-enabled service and health-plan tools, and the integration of its Cocoon leave-management platform. TriNet Group (NYSE:TNET) reported second-quarter results that reflected improved insurance performance, stronger customer retention and continued investment in sales and service initiatives, prompting the company to raise its full-year earnings outlook. Total revenue was $1.2 billion, down 5% from a year earlier, primarily reflecting lower worksite employee, or WSE, volumes. The company ended the quarter with about 300,000 total WSEs, down 12% year-over-year but flat sequentially. Co-employed WSEs totaled approximately 274,000, down 11% from the prior-year period. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now “At the midpoint of 2026, I’m pleased with the progress we’ve made on our priorities,” President and CEO Mike Simonds said. He cited higher retention, increasing sales momentum, expense management and improved earnings performance. Simonds said TriNet’s health-fee pricing actions over the past 18 months enabled the company to renew customers at rates more closely aligned with market health-cost trends. The company said it saw a combination of improved insurance performance and significantly better customer retention in the second quarter. → Microsoft Just Flipped the AI Spending Narrative Overnight Overall attrition improved 36% year-over-year. Attrition tied to health-fee pricing declined 58%, while attrition related to service declined 47%, according to Simonds. TriNet is seeking to achieve long-term retention rates several points higher than its historical level of roughly 80%. The company’s second-quarter insurance cost ratio, or ICR, was 86%, improving four percentage points from a year earlier. Chief Financial Officer Mala Murthy said two points of that improvement came from favorable prior-year development, while the other two points resulted from a one-time recovery of insurance administrative costs previously expensed in an earlier decade. → Carrier Earnings Could Send the Stock to a New All-Time High Murthy said health-cost trends stabilized in the high single digits during the quarter and were slightly favorable to TriNet’s forecast. The company experienced fewer inpatient procedures than expected and lower-than-forecast pharmaceutical inflation, aided by adoption of biosimilars and stabilization in GLP-1 drug usage. However, she said the company does not view lower pharmaceutical cost inflation as a permanent trend because of the potential introduction of high-cost drugs. TriNet expects its ICR to be higher in the second half than in the first half because of normal seasonal factors, including utilization patterns, deductibles being met and pooling-limit resets. Sales ended the second quarter flat year-over-year, though Simonds said momentum improved sequentially as customer decision cycles that had lengthened in late March and April began to normalize. He said TriNet expects sales growth in the second half. The company is retaining more experienced sales consultants, with the number of representatives with more than four years of experience rising 7% year-over-year. Productivity among those senior representatives increased 13% during the quarter, and they were, on average, five times more productive than first-year representatives. TriNet’s Ascend sales-development program is also expanding. Its first class of more than 20 representatives is expected to enter production in the third quarter, while more than 100 new hires have joined the program nationally. The company expects to finish the year with approximately 20% more sales consultants than it had at the end of 2025. The broker channel represented 32% of new sales at the end of the second quarter, while broker-generated requests for proposals increased 54% year-over-year. Simonds said TriNet sees the channel as an opportunity to expand distribution through national broker partnerships, although it remains more competitive than direct sales. For the fall selling season, TriNet expanded its health-plan library across a wider range of price points and introduced artificial intelligence tools intended to match clients with bundled plan choices. In July, it also launched an enhanced health-plan pricing engine that management said is designed to improve proposal quality, speed and consistency. TriNet said its AI-powered TriNet Assistant, launched during the spring, has handled 50% of customer-initiated chat sessions so far. The tool addresses inquiries related to benefits, payroll and workforce management, and has reduced service-case volumes for employees, according to Simonds. Management also highlighted the acquisition and integration of Cocoon, a leave-of-absence solution. The first customer cohort has migrated to the platform, while the second and third cohorts are expected to be completed by year-end. TriNet said the timing should position it to onboard new professional employer organization customers during the January enrollment period. Professional services revenue totaled $159 million, down 8% year-over-year but ahead of the company’s forecast. Murthy attributed the outperformance to firm pricing, favorable reporting methodology for state tax-related revenue and revenue from Cocoon. Interest revenue fell 33% to $12 million, in line with expectations, due to lower cash balances associated with certain tax credits. Second-quarter GAAP diluted earnings per share were $1.15, while adjusted diluted earnings per share were $1.55. Adjusted EBITDA was $128 million, representing a 10.9% margin. Net cash provided by operating activities was $88 million, and free cash flow increased 18% to $67 million. TriNet returned $31 million to shareholders during the quarter through dividends and share repurchases. The company repurchased about 500,000 shares for $18 million and paid a quarterly dividend of $0.29 per share. For 2026, TriNet maintained its total revenue guidance of $4.75 billion to $4.9 billion. It raised its professional services revenue outlook to $647 million to $663 million and improved its ICR outlook to a range of 88.5% to 89.5%. Adjusted EBITDA margin guidance was raised to 8.5% to 9%. GAAP diluted EPS guidance was set at $2.85 to $3.35. Adjusted diluted EPS guidance was raised to $4.50 to $5.10. Murthy said the company plans to use improved first-half earnings to accelerate investments in distribution, benefits offerings and its service model, with AI incorporated across those initiatives. TriNet Group, Inc is a leading professional employer organization (PEO) that offers integrated human capital management solutions to small and medium-size businesses. Through a bundled suite of services, TriNet manages payroll administration, employee benefits, workers' compensation, risk mitigation and federal and state compliance. Its cloud-based platform provides clients with centralized access to HR tools, analytics and streamlined workforce management capabilities. Founded in 1988 and headquartered in Dublin, California, TriNet has grown to support thousands of organizations across the United States. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "TriNet Group Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the second quarter's improved earnings performance to a successful 18-month health fee repricing strategy that realigned insurance costs with market trends. Retention rates improved significantly, with a 36% year-over-year decrease in total attrition driven by a 58% reduction in pricing-related departures and a 47% drop in service-related exits. The company is pivoting from a period of business stabilization toward realizing returns on growth-oriented investments in distribution and benefits innovation. Operational efficiency was bolstered by the launch of TriNet Assistant, an AI capability that now handles 50% of customer chat sessions, freeing staff for higher-value advisory work. Sales momentum recovered sequentially through the quarter after a slow start in April, supported by a 7% increase in senior sales consultants who are five times more productive than first-year reps. The broker channel is becoming a critical growth engine, now representing 32% of new sales with a 54% year-over-year increase in RFP volume. Integration of the Cocoon acquisition remains on track to address leave-of-absence compliance, a major pain point for the SMB market, ahead of the peak January onboarding season. The path to sustainable growth is sequenced to begin with revenue growth as pricing outpaces WSE volume declines, followed by volume stabilization through improved retention and new sales. Management expects to finish 2026 with approximately 20% more sales consultants than the prior year, with the first ASCEND training program class moving into production in Q3 and further cohorts expected to graduate quarterly throughout 2027. Full-year earnings guidance was raised based on first-half outperformance, though management maintains a cautious stance on persistently high high-single-digit medical inflation. Second-half insurance cost ratios (ICR) are expected to be seasonally higher than the first half due to typical utilization patterns, deductible fulfillment, and pooling limit resets. Strategic investments in the second half will accelerate across distribution, benefits offerings, and AI-integrated service models to capture value during the fall selling season. The Q2 insurance cost ratio benefited from a one-time recovery of previously expensed insurance administrative costs from the previous decade. Pharma cost inflation was lower than forecast due to biosimilar adoption and stabilized GLP-1 usage, though management does not view this as a permanent trend shift given future high-cost drug pipelines. Professional services revenue outperformed expectations due to firm pricing and favorability in state tax-related revenue reporting methodologies. WSE counts remain down 12% year-over-year, reflecting the cumulative impact of necessary but difficult repricing actions taken in the first quarter. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Confidence stems from sequential month-over-month improvement in decision-making speed and a massive 50% increase in broker-driven RFPs. The inflection point in total rep staffing and the high productivity of retained senior reps are expected to materialize into material growth in the second half. Management clarified that while first-half performance was strong, the second-half guidance accounts for historical volatility and typical seasonal utilization increases. The stabilization of health cost trends in the high single digits is viewed as a persistent reality rather than a temporary spike, necessitating continued pricing discipline. Success in the broker channel is driven by matching senior TriNet talent with local broker producers and including brokers as 'trusted advisors' in renewal discussions. Management believes they are only 'scratching the surface' of the under-penetrated SMB market where 90% of clients use brokers for health insurance. TriNet uses a 'customer health score' powered by AI to monitor sentiment across all interactions, allowing for proactive retention efforts before a client decides to leave. AI is being deployed to help sales reps select the optimal health care bundles for prospects, improving win rates and reducing sales friction.

This article first appeared on GuruFocus. Total Revenue: $1.2 billion, declining 5% year-over-year. Professional Services Revenue: $159 million, declining 8% year-over-year. Interest Revenue: $12 million, declining 33% year-over-year. Insurance Cost Ratio (ICR): 86%, a four-point year-over-year improvement. GAAP Earnings Per Diluted Share: $1.15. Adjusted Net Income Per Diluted Share: $1.55. Adjusted EBITDA: $128 million, representing an adjusted EBITDA margin of 10.9%. Net Cash Provided by Operating Activities: $88 million. Free Cash Flow: $67 million, growing 18% year-over-year. Total Worksite Employees (WSEs): Approximately 300,000, down 12% year-over-year. Co-Employed WSEs: Approximately 274,000, down 11% year-over-year. Share Repurchases: Approximately 500,000 shares for $18 million. Dividend: $0.29 per share paid in the quarter. Warning! GuruFocus has detected 8 Warning Signs with TNET. Is TNET fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Trinet Group Inc (NYSE:TNET) reported a 36% year-over-year improvement in overall customer attrition, driven by a 58% decrease in health fee pricing-related attrition and a 47% decrease in service-related attrition. The company's insurance cost ratio (ICR) improved to 86% in Q2, returning to its targeted range, and full-year ICR guidance was lowered to 88.5%-89.5%. Trinet Group Inc (NYSE:TNET) is seeing strong early results from its AI-powered 'TriNet Assistant', which handles 50% of customer chat sessions, improving service efficiency and customer satisfaction. Sales momentum is returning with sequential improvement through Q2, supported by a 7% year-over-year increase in senior sales reps and a 54% year-over-year increase in broker-driven RFPs. The company raised its full-year 2026 adjusted EBITDA margin guidance to 8.5%-9% and adjusted EPS guidance to $4.50-$5.10, reflecting improved earnings performance. The Ascend sales training program is scaling, with over 100 new reps hired, and the company expects to end 2025 with approximately 20% more sales consultants than the prior year. The integration of the Cocoon leave-of-absence solution is on track, with the first customer cohort migrated and plans to onboard new PEO customers by January. Trinet Group Inc (NYSE:TNET) generated $67 million in free cash flow in Q2, up 18% year-over-year, and returned $31 million to shareholders via buybacks and dividends. Total revenues declined 5% year-over-year to $1.2 billion, driven by a 12% decrease in total worksite employees (WSEs) and an 11% drop in co-employed WSEs. Professional services revenue fell 8% year-over-year, impacted by lower co-employed WSE counts, though it outperformed internal forecasts. Interest revenue dropped 33% year-over-year to $12 million, in line with expectations, due to reduced cash balances for certain tax credits. Health cost trends remain persistently high in the high single-digits, and the company expects normal ICR seasonality in the second half, which could pressure margins. Sales were flat year-over-year in Q2, with challenges persisting from March into April before momentum returned later in the quarter. The company experienced a contraction in its total sales force during the second half of 2025 and first half of 2026 due to a slowdown in traditional hiring while building the Ascend program. Customer hiring (CIE) did not accelerate in Q2, remaining consistent with last year's levels and in line with forecasts, indicating no near-term boost from client growth. The one-time benefit from recovered insurance administrative costs contributed to ICR improvement but is not expected to recur, and the company remains cautious on future pharma cost inflation. Here are the key highlights from the TriNet Group Inc (NYSE:TNET) Q2 2026 earnings call. Q: What drives the confidence in returning to sales growth in the second half of 2026, given that Q2 sales were flat year-over-year?A: (Mike Simonds, President and CEO) The confidence comes from several factors: sequential month-over-month improvement in sales momentum through Q2, which has continued into July; the total sales rep headcount is beginning to grow again; and the broker channel is showing strong momentum, with broker-driven RFPs up over 50% year-over-year. These investments in the Ascend program, retaining senior reps, and the broker channel give us confidence that full-year sales growth remains our target. Q: Why doesn't the updated ICR guidance for the second half of 2026 suggest year-over-year improvement, despite the repricing efforts?A: (Mala Murthy, CFO) The second-half ICR guidance factors in several elements. First, the year-to-date outperformance includes a one-time benefit and prior period development favorability. Second, while medical trends are stable, they remain persistently high in the high single-digits. Third, historical experience suggests potential lumpiness in claims in the second half. Finally, we expect normal second-half seasonality in ICR due to utilization patterns, deductibles being met, and pooling limit resets. Q: What is resonating most with brokers and leading to the significant increase in RFPs?A: (Mike Simonds, President and CEO) The success is driven by a focus on the fundamentals: putting the right local talent matched with the right broker producers, redesigning processes to give brokers "trust advisor" access and include them in renewal discussions, and dedicating client service personnel to the broker's block of business. It's about showing up as a true partner throughout the entire lifecycle, from prospecting to renewing. Q: When should we expect WSE growth to turn positive, and where are clients going when they leave?A: (Mike Simonds, President and CEO) The next mile marker is revenue growth, driven by improved retention slowing the WSE decline and pricing actions outpacing that decline. Following that, the sum total of growth investments in distribution, benefits, and service will turn the corner on WSE growth, though we are not pinpointing the exact timing. When clients leave due to healthcare pricing, they often go to an open market solution. When they leave for service reasons, we may lose to another competitor. Q: How much of the insurance profitability improvement was due to timing versus a more sustainable core trend?A: (Mala Murthy, CFO) The favorability is not characterized as timing. The year-over-year improvement was driven by two factors: a one-time benefit (about half the improvement) and prior year development favorability. The favorable emergence in prior year development is consistent with a stabilization in healthcare cost trends, which, while still high in the high single-digits, is a positive sign. Q: How are you retaining high-performing sales reps for longer, and what metrics will define a successful fall selling season?A: (Mike Simonds, President and CEO) Retention is driven by making it a focus, investing in frontline and regional management to build a stronger culture, and providing better tools and support to remove friction from the sales process. The new Ascend program also assigns junior reps to senior reps, providing administrative support. Success in the second half will be defined by strong year-over-year sales growth, continued acceleration in the broker channel, and growth in the direct channel. Q: How are you thinking about the broker channel's influence on revenue trajectory, and what is the profitability of a new client versus an existing one?A: (Mike Simonds, President and CEO) The broker channel currently represents about a third of new business, and that is growing, though direct sales will remain more than half. Profitability builds with tenure due to the cost of acquisition and, for a risk-taking PEO, a better understanding of the client's risk profile after two annual renewal cycles. This underscores why retention is critical for both volume growth and margin expansion. Q: How are you leveraging AI within the organization, both from a revenue and expense perspective?A: (Mike Simonds, President and CEO) AI is being used in several ways. A "customer health score" uses AI to monitor client interactions to predict NPS and retention, enabling proactive client management. AI is also used to select the right healthcare bundle for clients and powers the TriNet Assistant, which handles 50% of customer chat sessions. (Mala Murthy, CFO) AI tools are also being given to salespeople to improve prospecting and win rates. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

TriNet Group (TNET) came out with quarterly earnings of $1.55 per share, beating the Zacks Consensus Estimate of $1.01 per share. This compares to earnings of $1.15 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +53.47%. A quarter ago, it was expected that this human resources services outsourcing company would post earnings of $1.91 per share when it actually produced earnings of $2.48, delivering a surprise of +29.84%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. TriNet, which belongs to the Zacks Outsourcing industry, posted revenues of $311 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 16.44%. This compares to year-ago revenues of $291 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. TriNet shares have added about 18.8% since the beginning of the year versus the S&P 500's gain of 6.9%. While TriNet has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for TriNet was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.83 on $249.58 million in revenues for the coming quarter and $4.60 on $1.12 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Outsourcing is currently in the bottom 14% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Conduent (CNDT), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 10. This company is expected to post quarterly loss of $0.14 per share in its upcoming report, which represents a year-over-year change of -7.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Conduent's revenues are expected to be $702 million, down 6.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TriNet Group, Inc. (TNET) : Free Stock Analysis Report Conduent Inc. (CNDT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

50% Growth in GAAP Earnings per Diluted Share to $1.15 for the Second Quarter 2026 35% Growth in Adjusted Net Income per Diluted Share to $1.55 for the Second Quarter 2026 DUBLIN, Calif., July 30, 2026 /PRNewswire/ -- TriNet Group,Inc.(NYSE: TNET),a leading provider of comprehensive and flexible human capital management (HCM) solutions for small and medium-size businesses (SMBs), today announced financial results for the second quarter ended June 30, 2026. The second quarter highlights below include non-GAAP financial measures which are reconciled later in this release. "Our second quarter results reflect the progress we are making in delivering on our plan," said Mike Simonds, TriNet's President and CEO. "We increased our retention, managed costs, improved our bottom-line performance, and raised our full year earnings guidance." Simonds continued, "We are gaining traction across several initiatives. We expect further sales-force growth, channel activity is increasing, and our AI investments are driving an improved service experience. As we look to the second half, we are well positioned for the fall selling season." Second quarter highlights include: Total revenues decreased 5% to $1.2 billion compared to the same period last year. Professional service revenues decreased 8% to $159 million compared to the same period last year. Net income was $53 million, or $1.15 per diluted share, compared to net income of $37 million, or $0.77 per diluted share, in the same period last year. Adjusted Net Income was $72 million, or $1.55 per diluted share, compared to Adjusted Net Income of $55 million, or $1.15 per diluted share, in the same period last year. Adjusted EBITDA was $128 million, representing an Adjusted EBITDA Margin of 10.9%, compared to Adjusted EBITDA of $105 million, representing an Adjusted EBITDA Margin of 8.5% in the same period last year. Average Worksite Employees (WSEs) decreased 11% as compared to the same period last year, to approximately 298,000. Generated $88 million in Net cash provided by operating activities, and $67 million in Free Cash Flow. Full-Year 2026 Guidance In addition to announcing our second quarter 2026 results, we are revising our full-year 2026 guidance. Non-GAAP financial measures are reconciled later in this release. Quarterly Report on Form 10-Q We anticipate filing our Quarterly Report on Form 10-Q ("Form 10-Q") for the first half of 2026 with the U.S. Securities and Exchange Commission (SEC) and making it available at https://www.trinet.com on or about July 30, 2026. This press release should be read in conjunction with the Form 10-Q and the related Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Form 10-Q. Earnings Conference Call and Audio Webcast TriNet will host a conference call at 5:30 a.m. PT today to discuss its second quarter results for 2026. TriNet encourages participants to pre-register for the webcast. The live webcast of the conference call can be accessed on the Investor Relations section of TriNet's website at https://investor.trinet.com. Participants can pre-register for the webcast by going to: https://events.q4inc.com/attendee/927481617. Callers can pre-register for the conference call by going to: https://dpregister.com/sreg/10210705/1048397dc5d. For those who would like to join the call but have not pre-registered, they can do so by dialing +1 (412) 317-5426 and requesting the "TriNet Conference Call." A replay of the webcast will be available on this website for approximately one year. A telephonic replay will be available for two weeks following the conference call at +1 (412) 317-0088 conference ID: 5964638. About TriNet TriNet is a leading provider of Human Resources solutions for small and medium size businesses, offering advanced technology-enabled services that include human capital expertise, employee benefits such as health insurance and retirement plans, payroll and payroll tax administration, risk mitigation, and compliance consulting. Our long-term objective is to be the premier provider of HR services for a broad range of SMBs through industry leading benefits, sales distribution excellence, and a world class services delivery model. For more information, please visit TriNet.com or follow us on Facebook, LinkedIn and Instagram. Use of Non-GAAP Financial Measures Reconciliations of non-GAAP financial measures to TriNet's financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section titled "Non-GAAP Financial Measures." Forward-Looking Statements This press release contains, and statements made during the above referenced conference call will contain, statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among other things, TriNet's expectations and assumptions regarding: TriNet's financial guidance for the full-year 2026 and the underlying assumptions; TriNet's mid-term outlook, market positioning, and the underlying assumptions; TriNet's on-going AI investments, including the development of TriNet Assistant, and its ability to deliver improved service experiences; TriNet's ability to build momentum in its business, including through sales force growth; and TriNet's ability to execute on our strategy. Forward-looking statements are often identified by the use of words such as, but not limited to, "ability," "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "goal," "guidance," "impact," "intend," "may," "objective," "plan," "project," "should," "strategy," "support," "will," "would" and similar expressions or variations intended to identify forward-looking statements. These statements are not guarantees of future performance but are based on management's expectations as of the date hereof and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from our current expectations and any past or future results, performance or achievements expressed or implied by the forward-looking statements. Investors are cautioned not to place undue reliance upon any forward-looking statements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: our ability to manage unexpected changes in workers' compensation and health insurance claims and costs, including by WSEs; our ability to mitigate the distinct business risks we face as a co-employer; the effects of volatility in the financial and economic environment on the businesses that make up our client base; our inability to realize or sustain the expected benefits from our business realignment initiatives, and any associated increases in costs as a result of these initiatives; loss of clients for reasons beyond our control and the short-term contracts we typically use with our clients; the impact of regional or industry-specific economic and health factors on our operations; the impact of failures or limitations in the business systems and centers we rely upon; changes in our insurance coverage or our relationships with key insurance carriers; our ability to improve our services and technology to satisfy client and regulatory expectations, including with respect to artificial intelligence; our ability to effectively integrate businesses we have acquired or may acquire in the future; our ability to effectively manage and improve our operational effectiveness and resiliency; our ability to price our services at rates that our clients continue to find attractive; our ability to attract and retain qualified personnel; the effects of increased competition and our ability to compete effectively; the impact on our business of cyber-attacks, breaches, disclosures and other data-related incidents; our ability to comply with evolving data privacy, artificial intelligence and security laws; our ability to manage changes in, uncertainty regarding, or adverse application of the complex laws and regulations that govern our business; changing laws and regulations governing health insurance and employee benefits; the incurrence of losses related to employee retention tax credit claims filed on behalf of our clients; our ability to keep pace with changes in technology or provide timely enhancements to our solutions and support, including with respect to artificial intelligence; risks associated with our international operations, including potential political or economic risks; our ability to operate a business subject to numerous complex laws; changing laws and regulations governing health insurance and other traditional employee benefits at the federal, state, and local levels; our ability to be recognized as an employer of worksite employees and for our benefits plans to satisfy all requirements under federal and state regulations; changes in the laws and regulations that govern what it means to be an employer, employee or independent contractor; the impact of new and changing laws regarding remote work; our ability to comply with the licensing requirements that govern our solutions; the failure of third-party service providers performing their functions; the failure to comply with anti-corruption laws and regulations, economic and trade sanctions, and similar laws; the outcome of existing and future legal and tax proceedings; fluctuation in our results of operations, stock price and maintenance of performance measures year over year due to factors outside of our control; our ability to comply with the restrictions of our indebtedness and meet our debt obligations; the need for additional capital or to restructure our existing debt; the continuation of our stock repurchase program; and the impact of concentrated ownership in our stock by Atairos and other large stockholders and the anti-takeover provisions in our charter documents and under Delaware law. Any of these factors could cause our actual results to differ materially from our anticipated results. Further information on risks that could affect TriNet's results is included in our filings with the SEC, including under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on our investor relations website at http://investor.trinet.com and on the SEC website at www.sec.gov. Copies of these filings are also available by contacting TriNet Corporation's Investor Relations Department at [email protected]. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements in this press release, and any forward-looking statements in this press release speak only as of the date of this press release. In addition, we do not assume any obligation, and do not intend, to update any of our forward-looking statements, except as required by law. Key Financial and Operating Metrics We regularly review certain key financial and operating metrics to evaluate growth trends, measure our performance and make strategic decisions. These key financial and operating metrics may change over time. Our key financial and operating metrics for the periods presented were as follows: Non-GAAP Financial Measures In addition to the selected financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), we monitor other non-GAAP financial measures that we use to manage our business, to make planning decisions, to allocate resources and to use as performance measures in our executive compensation plan. These key financial measures provide an additional view of our operational performance over the long term and provide information that we use to maintain and grow our business. The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation from, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Reconciliation of GAAP to Non-GAAP Measures The table below presents a reconciliation of Net income to Adjusted EBITDA: The table below presents a reconciliation of Net income to Adjusted Net Income and Adjusted Net Income per share - diluted: The table below presents a reconciliation of Net cash provided by operating activities to Free Cash Flow: Reconciliation of GAAP to Non-GAAP Measures for the full-year 2026 guidance. Low and high percentages represent increases (decreases) from the same period in the previous year. The table below presents a reconciliation of net income to Adjusted Net Income and Adjusted Net Income per share - diluted: View original content to download multimedia:https://www.prnewswire.com/news-releases/trinet-announces-second-quarter-2026-results--raises-fy26-earnings-guidance-302838514.html