SEC Form 10-Q filed by TriNet Group Inc.

4/26/24 8:31:14 AM ET

Real Estate

Get the next $TNET alert in real time by email

tnet-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36373

TRINET GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		95-3359658
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Park Place,	Suite 600
Dublin,	CA	94568
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (510) 352-5000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock par value $0.000025 per share	TNET	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares of Registrant’s Common Stock outstanding as of April 19, 2024 was 50,563,849.


TABLE OF CONTENTS

TRINET GROUP, INC.

Form 10-Q - Quarterly Report

For the Quarterly Period Ended March 31, 2024

TABLE OF CONTENTS


	Form 10-Q Cross Reference	Page
Glossary		3
Cautionary Note Regarding Forward-Looking Statements		5
Unaudited Condensed Consolidated Financial Statements	Part I, Item 1.	27
Condensed Consolidated Statements of Income and Comprehensive Income		27

Condensed Consolidated Balance Sheets		28
Condensed Consolidated Statements of Stockholders' Equity		29
Condensed Consolidated Statements of Cash Flows		30
Notes to Condensed Consolidated Financial Statements		31
Note 1. Description of Business and Significant Accounting Policies		31
Note 2. Cash, Cash Equivalents and Investments - Unrestricted and Restricted		35
Note 3. Financial Instruments and Fair Value Measurements		35

Note 4. Accrued Workers' Compensation Costs		38

Note 5. Commitments and Contingencies		38
Note 6. Stock Based Compensation		39
Note 7. Stockholders' Equity		39
Note 8. Income Taxes		40
Note 9. Earnings Per Share		40


Management’s Discussion and Analysis of Financial Condition and Results of Operations	Part I, Item 2.	7
Quantitative and Qualitative Disclosures About Market Risk	Part I, Item 3.	25
Controls and Procedures	Part I, Item 4.	26
Legal Proceedings	Part II, Item 1.	41
Risk Factors	Part II, Item 1A.	41
Unregistered Sales of Equity Securities and Use of Proceeds	Part II, Item 2.	41
Defaults Upon Senior Securities	Part II, Item 3.	41
Mine Safety Disclosures	Part II, Item 4.	41
Other Information	Part II, Item 5.	41
Exhibits	Part II, Item 6.	43



TRINET	2	2024 Q1 FORM 10-Q


GLOSSARY			Table of Contents

Glossary of Acronyms and Abbreviations

Acronyms and abbreviations are used throughout this report, particularly in Part I, Item 1. Unaudited Condensed Consolidated Financial Statements and Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.






2022 Credits			Includes both of our announced 2022 credits, each of which provides eligible clients with discretionary credits, subject to certain predefined conditions.
2021 Credit Agreement			Our credit agreement dated February 26, 2021, as amended, supplemented or modified from time to time, most recently August 16, 2023.

2021 Revolver			Our $700 million revolving line of credit included in our 2021 Credit Agreement
2029 Notes			Our $500 million senior unsecured notes maturing in March 2029

2031 Notes			Our $400 million senior unsecured notes maturing in August 2031
AFS			Available-for-sale


CARES Act			Coronavirus Aid Relief and Economic Security Act

CEO			Chief Executive Officer
CFO			Chief Financial Officer

COBRA			Consolidated Omnibus Budget Reconciliation Act
Colleague			TriNet’s internal employees (as distinguished from WSEs and HRIS Users)
COPS			Cost of providing services

COVID-19			Novel coronavirus


D&A			Depreciation and amortization expenses
EBITDA			Earnings before interest expense, taxes, depreciation and amortization of intangible assets

EPS			Earnings Per Share
ERISA			Employee Retirement Income Security Act
ESAC			Employer Services Assurance Corporation

ETR			Effective tax rate

FFCRA			Families First Coronavirus Response Act
G&A			General and administrative
GAAP			Generally Accepted Accounting Principles in the United States


HCM			Human capital management
HR			Human Resources
HRIS			Human resources information system
HRIS User			A client employee who is a user of our HR Platform (for example, employees of an HRIS client)



IRS			Internal Revenue Service
ICR			Insurance cost ratio
ISR			Insurance service revenues


LIBOR			London Inter-bank Offered Rate


MD&A			Management's Discussion and Analysis of Financial Condition and Results of Operations



OE			Operating expenses

PEO			Professional Employer Organization
PFC			Payroll funds collected


PSR			Professional service revenues
R&D			Research and Development
Reg FD			Regulation Fair Disclosure
ROU			Right-of-use
RSU			Restricted Stock Unit



TRINET	3	2024 Q1 FORM 10-Q


GLOSSARY			Table of Contents


SBC			Stock Based Compensation
S&M			Sales and marketing
S&P			Standard & Poor's
SD&P			Systems development and programming
SEC			U.S. Securities and Exchange Commission
SMB			Small and medium-size business


TriNet Clarus R+D			Clarus R+D Solutions, LLC
U.S.			United States

WSE			A worksite employee who is co-employed by, or otherwise receiving services from a TriNet PEO
YTD			Year to date
Zenefits			YourPeople, Inc. and its subsidiaries



TRINET	4	2024 Q1 FORM 10-Q


FORWARD LOOKING STATEMENTS AND OTHER FINANCIAL INFORMATION			Table of Contents

Cautionary Note Regarding Forward-Looking Statements

For purposes of this Quarterly Report on Form 10-Q (Form 10-Q), the terms “TriNet,” “the Company,” “we,” “us” and “our” refer to TriNet Group, Inc., and its subsidiaries. This Form 10-Q contains 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. Forward-looking statements are often identified by the use of words such as, but not limited to, "ability," “anticipate,” “believe,” “can,” “continue,” “could,” “design,” “estimate,” “expect,” “forecast,” “hope,” "impact," “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” "value," “will,” “would” and similar expressions or variations intended to identify forward-looking statements. Examples of forward-looking statements include, among others, TriNet’s expectations regarding: our ability to successfully diversify our overall service and technology offerings to support SMBs throughout their lifecycle; our plans and ability to grow our client base; the impact of our ongoing efforts to ensure that our billing practices best match the expectations of our customers and the impact on our WSE count; our expectations regarding medical utilization rates by our WSEs and the impact of inflation on our insurance costs; the effect that our stock repurchase program will have on our business; the impact of our notes; our ability to leverage our scale and industry HR experience to deliver vertical focused offerings; the impact of planned improvements to our technology platform and HRIS software and whether they will meet the needs of our current clients and attract new ones; the implementation of our ERP system and its impact on our internal financial controls and operations; our ability to improve operating efficiencies; the impact of our client service initiatives and whether they enhance client experience and satisfaction; our continued ability to provide access to a broad range of benefit programs on a cost-effective basis; our expectations regarding the volume and severity of insurance claims and insurance claim trends; the effectiveness of our risk strategies for, and management of, workers' compensation, health benefit insurance costs and deductibles, and EPLI risk; the metrics that may be indicators of future financial performance; the relative value of our benefit offerings versus those SMBs can independently obtain; the impact that our benefit offerings have for SMBs seeking to attract and retain employees; the principal competitive drivers in our market; the impact of our plans to improve our sales performance, grow net new clients and manage client attrition; our investment strategy and its impact on our ability to generate future interest income, net income, and Adjusted EBITDA; seasonal trends and their impact on our business; fluctuations in the period-to-period timing of when we incur certain operating expenses; the estimates and assumptions we use to prepare our financial statements; our belief we can meet our present and reasonably foreseeable cash needs and future commitments through existing liquid assets and continuing cash flows from corporate operating activities; and other expectations, outlooks and forecasts on our future business, operational and financial performance.

Important factors that could cause actual results, level of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements are discussed above and throughout our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 15, 2024 (our 2023 Form 10-K), including those appearing under the heading “Risk Factors” in Item 1A, and under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our 2023 Form 10-K, and those appearing in the other periodic filings we make with the SEC, and including risk factors associated with: our ability to manage unexpected changes in workers’ compensation and health insurance claims and costs by WSEs; our ability to mitigate the unique 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; 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; the impact of discontinuing our discretionary credits on our business and client loyalty and retention; 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; 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 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 protect against and remediate cyber-attacks, breaches, disclosures and other data-related incidents, whether intentional or inadvertent and whether attributable to us or our service providers; our ability to comply with evolving data privacy 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; 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 outcome of existing and future legal and tax



TRINET	5	2024 Q1 FORM 10-Q


FORWARD LOOKING STATEMENTS AND OTHER FINANCIAL INFORMATION			Table of Contents

proceedings; fluctuation in our results of operations and stock price due to factors outside of our control; our ability to comply with the restrictions of our credit facility and meet our debt obligations; and the impact of concentrated ownership in our stock by Atairos and other large stockholders. Any of these factors could cause our actual results to differ materially from our anticipated results.

Forward-looking statements are not guarantees of future performance but are based on management’s expectations as of the date of this Form 10-Q 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 results, performance or achievements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

The information provided in this Form 10-Q is based upon the facts and circumstances known as of the date of this Form 10-Q, and any forward-looking statements made by us in this Form 10-Q speak only as of the date of this Form 10-Q. We undertake no obligation to revise or update any of the information provided in this Form 10-Q, except as required by law.

The MD&A of this Form 10-Q includes references to our performance measures presented in conformity with GAAP and 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 plans. Refer to the Non-GAAP Financial Measures within our MD&A for definitions and reconciliations from GAAP measures.

Website Disclosures

We use our website (www.trinet.com) to announce material non-public information to the public and to comply with our disclosure obligations under Reg FD. We also use our website to communicate with the public about our Company, our services, and other matters. Our SEC filings, press releases and recent public conference calls and webcasts can also be found on our website. The information we post on our website could be deemed to be material information under Reg FD. We encourage investors and others interested in our Company to review the information we post on our website. Information contained in or accessible through our website is not a part of this report.

Our Company is the sole owner of the trademark “TriNet” and other trademarks appearing in this report. Our Company does not intend to use or display trade names or trademarks owned by others in a manner that would imply any form of association with any of those companies.



TRINET	6	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Overview

TriNet is a leading provider of comprehensive and flexible HCM solutions designed to address a wide range of SMB needs as they change over time. Our flexible HCM solutions free SMBs from HR complexities and empower SMBs to focus on what matters most - growing their business and enabling their people.

TriNet offers access to human capital expertise, benefits, payroll, risk mitigation and compliance, all enabled by industry leading technology capabilities. TriNet's suite of products also includes services and software-based solutions to help streamline workflows by connecting HR, benefits, payroll, time and attendance, and employee engagement. Clients can use our industry tailored PEO services and technology platform to receive the full benefit of our HCM services enabling their WSEs to participate in our TriNet-sponsored employee benefit plans. Clients can alternatively choose to use our self-directed, cloud-based HRIS software solution and add HR services such as payroll and access to benefits management as needed. By providing PEO and HRIS services, we believe that we can support a wider range of SMBs and create a pipeline of HRIS clients that may be able to benefit from and transition to TriNet’s higher-touch PEO services at future points in their business lifecycle. In order to better serve TriNet’s customers throughout their business lifecycle, we are investing in our technology platform so that it can accommodate both PEO and HRIS customers.

Operational Highlights

Our consolidated results for the first quarter of 2024 reflect our continuing efforts to serve our clients, attract new clients and invest in our platform.

During the three months ended March 31, 2024, we:

•improved sales performance and customer retention,

•continued to grow total revenues and manage expenses prudently,

•launched a common stock dividend of $0.25 per share paid in April 2024,

•welcomed Mike Simonds as our new President and CEO, and

•celebrated our ten-year anniversary as a NYSE-listed company.



TRINET	7	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Performance Highlights

Our results for the first quarter ended March 31, 2024, when compared to the same period of 2023, are noted below:

Q1 2024


	$1.3B			$122M			86%
	Total revenues			Operating income			Insurance cost ratio
	1	%	increase	(28)	%	decrease	4	%	increase

	$91M			$1.78			$111M
	Net income			Diluted EPS			Adjusted Net income *
	(31)	%	decrease	(18)	%	decrease	(26)	%	decrease

	348,164			351,919			195,157
	Average WSEs **			Total WSEs **			Average HRIS Users
	6	%	increase	7	%	increase	(16)	%	decrease

*	Non-GAAP measure. See definitions below under the heading "Non-GAAP Financial Measures".
**	Total WSEs and Average WSEs include approximately 19,600 and 17,600, respectively, for incremental WSEs that were charged a platform user access fee. Additionally, Total WSEs and Average WSEs include approximately 5,300 and 5,400, respectively, of incremental additional service recipients for the quarter ended March 31, 2024. These were identified as a result of our ongoing effort to ensure that our billing practices best match the expectations of our customers. For details, refer to the heading "Operating Metrics – Worksite Employees (WSEs).”

Our total revenues increased 1% compared to the same period in 2023, driven by rate increases, partially offset by lower health plan enrollment.

During the first quarter of 2024, our Average WSEs and Total WSEs increased 6% and 7%, respectively, compared to the same period in 2023, primarily due to additional PEO Platform Users and additional service recipients identified as a result of our ongoing effort to ensure that our billing practices best match the expectations of our customers.

Our ICR was 4 points higher compared to the same period in 2023, driven by increased health benefits utilization rates and inflation in health costs.

Higher insurance costs, operating expenses and interest expense, partially offset by higher revenues, resulted in decreases of net income and Adjusted Net income of 31% and 26%, respectively, as compared to the same period in 2023.



TRINET	8	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Results of Operations

The following table summarizes our results of operations for the first quarter ended March 31, 2024, when compared to the same period of 2023. For details of the critical accounting judgments and estimates that could affect our Results of Operations, see the Critical Accounting Judgments and Estimates section within the MD&A in Item 7 of our 2023 Form 10-K.


	Three Months Ended March 31,
(in millions, except operating metrics data)	2024			2023			% Change
Income Statement Data:
Professional service revenues	$	214		$	205		4	%
Insurance service revenues	1,050			1,041			1
Total revenues	1,264			1,246			1
Insurance costs	907			852			6
Operating expenses	235			225			4
Total costs and operating expenses	1,142			1,077			6
Operating income	122			169			(28)
Other income (expense):
Interest expense, bank fees and other	(16)			(7)			129
Interest income	18			18			—


Income before provision for income taxes	124			180			(31)
Income taxes	33			49			(33)
Net income	$	91		$	131		(31)	%


Cash Flow Data:
Net cash used in operating activities	(122)			(77)			58
Net cash used in investing activities	(47)			(23)			104
Net cash provided by (used in) financing activities	(30)			200			(115)

Non-GAAP measures (1):



Adjusted EBITDA	$	180		223			(19)
Adjusted Net income	$	111		150			(26)
Corporate Operating Cash Flows	201			169			19

Operating Metrics:
Insurance Cost Ratio	86		%	82		%	4
Average WSEs (2)	348,164			327,107			6	%
Total WSEs (2)	351,919			328,299			7	%
Average HRIS Users	195,157			231,347			(16)	%

(1) Refer to Non-GAAP measures definitions and reconciliations from GAAP measures under the heading "Non-GAAP Financial Measures".

(2) Total WSEs and Average WSEs include approximately 19,600 and 17,600, respectively, for incremental WSEs that were charged a platform user access fee for the first quarter ended March 31, 2024,. Additionally, Total WSEs and Average WSEs include approximately 5,300 and 5,400, respectively, incremental additional service recipients. These were identified as a result of our ongoing effort to ensure that our billing practices best match the expectations of our customers. For details, refer to the heading "Operating Metrics – Worksite Employees (WSEs).”

The following table summarizes our balance sheet data as of March 31, 2024 compared to December 31, 2023.


(in millions)	March 31, 2024		December 31, 2023		% Change
Balance Sheet Data:

Working capital	$	171	$	115	49	%
Total assets	3,968		3,693		7
Debt	1,093		1,093		—
Total stockholders’ equity	143		78		83



TRINET	9	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with 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.


Non-GAAP Measure	Definition	How We Use The Measure



Adjusted EBITDA	• Net income, excluding the effects of: - income tax provision, - interest expense, bank fees and other, - depreciation, - amortization of intangible assets, - stock based compensation expense, - amortization of cloud computing arrangements, and - transaction and integration costs.	• Provides period-to-period comparisons on a consistent basis and an understanding as to how our management evaluates the effectiveness of our business strategies by excluding certain non-recurring costs, which include transaction and integration costs, as well as certain non-cash charges such as depreciation and amortization, and stock-based compensation and certain impairment charges recognized based on the estimated fair values. We believe these charges are either not directly resulting from our core operations or not indicative of our ongoing operations. • Enhances comparisons to the prior period and, accordingly, facilitates the development of future projections and earnings growth prospects. • Provides a measure, among others, used in the determination of incentive compensation for management. • We also sometimes refer to Adjusted EBITDA margin, which is the ratio of Adjusted EBITDA to total revenues.
Adjusted Net Income	• Net income, excluding the effects of: - effective income tax rate (1), - stock based compensation, - amortization of intangible assets, net, - non-cash interest expense, - transaction and integration costs, and - the income tax effect (at our effective tax rate (1) of these pre-tax adjustments.	• Provides information to our stockholders and board of directors to understand how our management evaluates our business, to monitor and evaluate our operating results, and analyze profitability of our ongoing operations and trends on a consistent basis by excluding certain non-cash charges.
Corporate Operating Cash Flows	• Net cash provided by (used in) operating activities, excluding the effects of: - Assets associated with WSEs (accounts receivable, unbilled revenue, prepaid expenses, other payroll assets and other current assets) and - Liabilities associated with WSEs (client deposits and other client liabilities, accrued wages, payroll tax liabilities and other payroll withholdings, accrued health insurance costs, accrued workers' compensation costs, insurance premiums and other payables, and other current liabilities).	• Provides information that our stockholders and management can use to evaluate our cash flows from operations independent of the current assets and liabilities associated with our WSEs. • Enhances comparisons to prior periods and, accordingly, used as a liquidity measure to manage liquidity between corporate and WSE related activities, and to help determine and plan our cash flow and capital strategies.

(1) Non-GAAP effective tax rate is 25.6% for the first quarters of 2024 and 2023, which excludes the income tax impact from stock-based compensation, changes in uncertain tax positions, and nonrecurring benefits or expenses from federal legislative changes.



TRINET	10	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Reconciliation of GAAP to Non-GAAP Measures

The table below presents a reconciliation of Net income to Adjusted EBITDA:


	Three Months Ended March 31,
(in millions)	2024			2023
Net income	$	91		$	131
Provision for income taxes	33			49
Stock based compensation	20			11
Interest expense, bank fees and other	16			7
Depreciation and amortization of intangible assets	18			18
Amortization of cloud computing arrangements	2			2
Transaction and integration costs	—			5
Adjusted EBITDA	$	180		$	223
Adjusted EBITDA Margin	14.2		%	17.9		%

The table below presents a reconciliation of Net income to Adjusted Net Income:


	Three Months Ended March 31,
(in millions)	2024		2023
Net income	$	91	$	131
Effective income tax rate adjustment	1		3
Stock based compensation	20		11
Amortization of other intangible assets, net	5		6

Transaction and integration costs	—		5
Income tax impact of pre-tax adjustments	(6)		(6)
Adjusted Net Income	$	111	$	150

The table below presents a reconciliation of net cash provided by operating activities to Corporate Operating Cash Flows:


	Three Months Ended March 31,
(in millions)	2024		2023
Net cash used in operating activities	$	(122)	$	(77)
Less: Change in WSE related other current assets	(420)		(178)
Less: Change in WSE related liabilities	97		(68)
Net cash used in operating activities - WSE	$	(323)	$	(246)
Net cash provided by operating activities - Corporate	$	201	$	169



TRINET	11	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Operating Metrics

Worksite Employees (WSE)

Average WSE change is a volume measure we use to monitor the performance of our PEO business. Our PEO clients generally change their payroll service providers at the beginning of the payroll tax and benefits enrollment year; as a result, we have historically experienced our highest volumes of new PEO clients joining and existing clients terminating in the month of January. PEO client attrition, new PEO client additions and changes in employment levels within our installed PEO client base all impact our Average WSEs and Total WSEs as we move through a calendar year.

We support WSEs from the date on which their co-employment with TriNet commences through the end of their co-employment with TriNet and also after their co-employment period. We define WSEs to include co-employees and other individuals receiving PEO services, such as individuals who receive COBRA benefits post co-employment or are subject to partnership tax reporting as well as individuals who utilize our PEO platform on behalf of TriNet PEO clients. As part of an ongoing effort to ensure that our billing practices best match the expectations of our customers, in the third quarter of 2023 we determined that certain individuals such as those described above and certain co-employees were not previously or consistently counted in Total WSEs and Average WSEs. This resulting adjustment increased our reported Total WSEs by approximately 5,300 for March 31, 2024 and Average WSEs by approximately 5,400 for the first quarter of 2024. We intend to continue our ongoing effort to ensure that our billing practices best match the expectations of our customers and in the future we may identify additional individuals that should be included in Total WSEs and Average WSEs.

In December 2023, we implemented a platform user access fee to charge clients for those users of our PEO platform that may not be co-employed by us and to charge clients for co-employees for whom payroll may not be regularly run. In addition to co-employees for whom payroll may not be regularly run, this includes individuals authorized by our clients to access and use the PEO platform for functions such as bookkeeping and benefits management. The amount of the fee is comparable to the fee we charge for users of our HRIS platform. While the amount of revenue we recognized for this service to date has not been significant, these users of the PEO platform for whose access we charged this fee increased our reported Total WSEs by approximately 19,600 as of March 31, 2024 and Average WSEs by approximately 17,600 for the first quarter of 2024.

The effect of this new fee is that we are now receiving revenue from two types of users on our PEO platform, those that are co-employed in our PEO business and those that are utilizing our PEO platform, albeit in a more limited capacity. The table below illustrates how those two components comprise our Total WSE and Average WSE metrics.


	Three Months Ended March 31,		% Change
	2024	2023		2024 vs. 2023

Average WSEs	348,164	327,107		6
Co-Employed	330,566	327,107		1
PEO Platform Users	17,598	N/A		N/A
Total WSEs	351,919	328,299		7
Co-Employed	332,361	328,299		1
PEO Platform Users	19,558	N/A		N/A

Average WSEs increased 6% when comparing the first quarter of 2024 to the same period in 2023, primarily due to the additional Co-Employed and PEO Platform Users WSEs described above. The growth in Average WSEs was driven by our Main Street, Non-Profit and Financial Services verticals, partially offset by decreases in our Technology and Professional Services verticals.

Total WSEs can be used to estimate our beginning WSEs for the next period and, as a result, can be used as an indicator of our potential future success in generating revenue, growing our business and retaining clients. Total WSEs increased 7% when compared to the same period in 2023, primarily due to the additional Co-Employed and PEO Platform Users WSEs described above.

Anticipated revenues for future periods can diverge from the revenue expectation derived from Average WSEs or Total WSEs due to pricing differences across our HCM solutions and services and the degree to which clients and WSEs elect to participate in our solutions during future periods. In addition to focusing on growing our Average WSE



TRINET	12	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

and Total WSE counts, we also focus on pricing strategies, benefit participation and service differentiation to expand the value we provide to our clients and our resulting revenue opportunities. We report the impact of client and WSE participation differences as a change in mix.

We continue to invest in efforts intended to enhance client experience, improve our new sales performance, and manage client attrition, through product development as well as operational and process improvements. As we continue our work in combining our PEO platform and our HRIS SaaS capabilities into a single platform, these various types of TriNet users will all be served from the same platform. In addition to focusing on retaining and growing our WSE base, we continue to review acquisition opportunities that would expand our product offering and provide further scale.

HRIS Users

Average HRIS Users is a volume measure we use to monitor the performance of our cloud-based HRIS services. Average HRIS Users for the first quarter 2024 and 2023, was 195,157, and 231,347, respectively. This decline is being driven by both higher client attrition as compared to new client additions and lower hiring by HRIS clients similar to SMB hiring trends that we have observed in our PEO business.

Insurance Cost Ratio (ICR)

ICR is a performance measure calculated as the ratio of insurance costs to insurance service revenues. We believe that ICR promotes an understanding of our insurance cost trends and our ability to align our relative pricing to risk performance.

We purchase workers' compensation and health benefits coverage for our WSEs. Under the insurance policies for this coverage, we bear claims costs up to a defined deductible amount. Our insurance costs, which comprise a significant portion of our overall costs, are significantly affected by our WSEs’ health and workers' compensation insurance claims experience. We set our insurance service fees for workers’ compensation and health benefits in advance for fixed benefit periods. As a result, increases in insurance costs above our projections, reflected as a higher ICR, result in lower net income. Decreases in insurance costs below our projections, reflected as a lower ICR, result in higher net income, but can be an indicator that insurance costs are developing more slowly than our projections, which are reflected in our fees, and this can have a negative impact over time on client retention and new sales.



TRINET	13	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Under our fully-insured workers' compensation insurance policies, we assume the risk for losses up to $1 million per claim occurrence (deductible layer). The ultimate cost of the workers’ compensation services provided cannot be known until all the claims are settled. Our ability to predict these costs is limited by unexpected increases in frequency or severity of claims, which can vary due to changes in the cost of treatments or claim settlements.

Under our risk-based health insurance policies, we assume the risk of variability in future health claims costs for our enrollees. This variability typically results from changing trends in the volume, severity and ultimate cost of medical and pharmaceutical claims, due to changes to the components of medical cost trend, which we define as changes in participant use of services, including the introduction of new treatment options, changes in treatment guidelines and mandates, and changes in the mix, cost of providing treatment and timing of services provided to plan participants. These trends change, and other seasonal trends and variability may develop. As a result, it is difficult for us to predict our insurance costs with accuracy and a significant increase in these costs could have a material adverse effect on our business.


	Three Months Ended March 31,
(in millions)	2024			2023
Insurance costs	$	907		$	852
Insurance service revenues	1,050			1,041
Insurance Cost Ratio	86		%	82		%

ICR increased for the first quarter as compared to the same period in 2023, primarily driven by higher insurance costs. Insurance costs increased due to higher costs associated with medical services utilization, in particular pharmacy costs and outpatient services. This was partially offset by favorable prior period development in workers' compensation.

Total Revenues

Our revenues consist of PSR and ISR. PSR represents fees charged to clients for processing payroll-related transactions on behalf of our PEO and HRIS clients, access to our HR expertise, employment and benefit law compliance services, other HR-related and tax credit filing services and fees charged to access our cloud-based HRIS services. ISR consists of insurance-related billings and administrative fees collected from PEO clients and withheld from WSEs for workers' compensation insurance and health benefit insurance plans provided by third-party insurance carriers.

Monthly total revenues per Average WSE is a measure we use to monitor our PEO pricing strategies. This measure was flat during the first quarter of 2024 compared to the same period in 2023.

We also use the following measures to further analyze changes in total revenue:

•Volume - the percentage change in period over period co-employed Average WSEs,

•Rate - the combined weighted average percentage changes in service fees for each vertical service and changes in service fees associated with each insurance service offering,

•Mix - the change in composition of Average WSEs within our verticals combined with the composition of our enrolled WSEs within our insurance service offerings and the composition of products and services our clients receive, including TriNet Clarus R+D, and

•HRIS - incremental HRIS cloud services revenue.



TRINET	14	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

PSR

ISR - % represents proportion of insurance service revenues to total revenues

*Total revenues generated from PEO services only

The increase in total revenue for the first quarter of 2024 was primarily driven by rate increases, partially offset by lower health plan enrollment.

Operating Income

Our operating income consists of total revenues less insurance costs and OE. Our insurance costs include insurance premiums for coverage provided by insurance carriers, expenses for claims costs and risk management and administrative services, and changes in accrued costs related to contractual obligations with our workers' compensation and health benefit carriers. Our OE consists primarily of our colleagues' compensation related expenses, which includes payroll, payroll taxes, SBC, bonuses, commissions and other payroll-and benefits-related costs.

The table below provides a view of the changes in components of operating income for the first quarter of 2024, as compared to the same period in 2023.


(in millions)
$169		First Quarter 2023 Operating Income
	+18	Higher total revenues primarily driven by rate increases from our PEO services, partially offset by lower health plan enrollment.
	-55	Higher insurance costs primarily driven by higher health insurance utilization and rate inflation.
	-10	OE increased due to higher compensation expenses partially offset by lower transaction and integration costs and discretionary spending.
$122		First Quarter 2024 Operating Income



TRINET	15	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Professional Service Revenues

Our PEO and HRIS clients are primarily billed on a fee per WSE or HRIS User per month per transaction. Our vertical approach provides us the flexibility to offer our PEO clients in different industries with varied services at different prices, which we believe potentially reduces the value of solely using Average WSE and Total WSE counts as indicators of future potential revenue performance.

PSR from PEO Services customers and HRIS cloud services clients was as follows:


	Three Months Ended March 31,
(in millions)	2024		2023
PEO Services	$	203	$	193
HRIS Cloud Services	11		12
Total	$	214	$	205

We also analyze changes in PSR with the following measures:

•Volume - the percentage change in period over period co-employed Average WSEs,

•Rate - the weighted average percentage change in fees for each vertical,

•Mix - the change in composition of Average WSEs across our verticals and the composition of products and services our clients receive, including TriNet Clarus R+D, and

•HRIS - incremental HRIS cloud services revenue.

The increase in PSR for the first quarter of 2024 was primarily driven by higher Average WSEs and rates, partially offset by changes in composition of Average WSEs across our verticals and the composition of products and services our clients receive, including TriNet Clarus R+D.

Insurance Service Revenues

ISR consists of insurance services-related billings and administrative fees collected from PEO clients and withheld from WSE payroll for health benefits and workers' compensation insurance provided by third-party insurance carriers.

We use the following measures to analyze changes in ISR:

•Volume - the percentage change in period over period co-employed Average WSEs,

•Rate - the weighted average percentage change in fees associated with each of our insurance service offerings, and

•Mix - all other changes including the composition of our enrolled WSEs within our insurance service offerings (health plan enrollment).



TRINET	16	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

The increase in ISR for the first quarter was primarily driven by rate increases, partially offset by lower health plan enrollment.

Insurance Costs

Insurance costs include insurance premiums for coverage provided by insurance carriers, payments for claims costs and expenses for other risk management and administrative services, reimbursement of claims payments made by insurance carriers or third-party administrators below a predefined deductible limit, and changes in accrued costs related to contractual obligations with our workers' compensation and health benefit carriers.

We use the following measures to analyze changes in insurance costs:

•Volume - the percentage change in period over period co-employed Average WSEs,

•Rate - the weighted average percentage change in cost trend associated with each of our insurance service offerings, and

•Mix - all other changes including the composition of our enrolled WSEs within our insurance service offerings (health plan enrollment).

Insurance costs increased for the first quarter, primarily due to higher utilization, primarily due to prescription and outpatient services as well as inflationary increases in rates paid for services. This was partially offset by lower health plan enrollment.



TRINET	17	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Operating Expenses

OE includes COPS, S&M, G&A, SD&P, and D&A.

We had approximately 3,600 colleagues as of March 31, 2024 primarily across the U.S. but also in India and Canada. Compensation costs for our colleagues include payroll, payroll taxes, SBC, bonuses, commissions and other payroll- and benefits-related costs. Compensation-related expense represented 68% and 65% of our OE in the first quarters of 2024 and 2023, respectively.

Transaction and integration costs associated with our acquisitions of Zenefits and Clarus R+D are included in G&A. These costs include advisory, legal, and employee retention costs tied to ongoing employment.

During the first quarter of 2024 , OE increased 4% when compared to the same period in 2023. The ratio of OE to total revenues was 19% for the first quarters of 2024 and 2023.

% represents portion of compensation related expense included in operating expenses

We analyze and present our OE based upon the business functions COPS, S&M, G&A and SD&P and D&A. The charts below provide a view of the expenses of the business functions. Dollars are presented in millions and percentages represent year-over-year change.



TRINET	18	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents


(in millions)
$225		Q1 2023 Operating Expenses
	+1	COPS increased slightly due to higher compensation expense.
	+3	S&M increased, driven primarily by higher compensation to support our sales force together with higher corporate events expenses, partially offset by lower advertising costs.
	+5	G&A increased due to higher compensation expense partially offset by lower transaction and integration expense.
	+1	SD&P was consistent with the prior period as higher compensation expense was offset by lower consulting expense.
	—	D&A was consistent with the prior period.
	$235	Q1 2024 Operating Expense

The primary spend type drivers to the changes in our OE are presented below:

Other Income (Expense)

Other income (expense) consists primarily of interest income from cash and investments and interest expense on our outstanding debt.

Interest income for the first quarter of 2024 was consistent with the prior period. The higher interest expense, bank fees and other for the first quarter of 2024 was primarily due to the additional interest on our 2031 Notes issued in the third quarter of 2023.



TRINET	19	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Income Taxes

Our ETR was 27% for the first quarter of 2024 and 2023. The increase in tax benefits related to stock-based compensation from the first quarter of 2023 was offset by an increase in non-deductible compensation in the first quarter of 2024.



TRINET	20	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Liquidity and Capital Resources

Liquidity

Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations. Our principal source of liquidity for operations is derived from cash provided by operating activities. We rely on cash provided by operating activities to meet our short-term liquidity requirements, which primarily relate to the payment of corporate payroll and other operating costs, and capital expenditures. Our cash flow related to WSE payroll and benefits is generally matched by advance collection from our PEO clients. To minimize the credit risk associated with remitting the payroll and associated taxes and benefits costs, we require PEO clients to prefund the payroll and related payroll taxes and benefits costs.

Included in our balance sheets are assets and liabilities resulting from transactions directly or indirectly associated with WSEs, including payroll and related taxes and withholdings, our sponsored workers' compensation and health insurance programs, and other benefit programs. Although we are not subject to regulatory restrictions that require us to do so, we distinguish and manage our corporate assets and liabilities separately from those current assets and liabilities held by us to satisfy our employer obligations associated with our WSEs as follows:


	March 31, 2024						December 31, 2023
(in millions)	Corporate		WSE		Total		Corporate		WSE		Total
Current assets:
Cash and cash equivalents	$	298	$	—	$	298	$	287	$	—	$	287
Investments	85		—		85		65		—		65
Restricted cash, cash equivalents and investments	135		924		1,059		22		1,247		1,269
Other current assets	94		1,304		1,398		73		884		957
Total current assets	$	612	$	2,228	$	2,840	$	447	$	2,131	$	2,578




Total current liabilities	$	441	$	2,228	$	2,669	$	332	$	2,131	$	2,463

Working capital	$	171	$	—	$	171	$	115	$	—	$	115

As of March 31, 2024, we did not have any material off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Working capital for WSEs related activities

We designate funds to ensure that we have adequate current assets to satisfy our current obligations associated with WSEs. We manage our WSE payroll and benefits obligations through collections of payments from our clients which generally occur two to three days in advance of client payroll dates. We regularly review our short-term obligations associated with our WSEs (such as payroll and related taxes, insurance premium and claim payments) and designate funds required to fulfill these short-term obligations, which we refer to as PFC. PFC is included in current assets as restricted cash, cash equivalents and investments.

We manage our sponsored benefit and workers' compensation insurance obligations by maintaining collateral funds in restricted cash, cash equivalents and investments. These collateral amounts are generally determined at the beginning of each plan year and we may be required by our insurance carriers to adjust our collateral balances when facts and circumstances change. We regularly review our collateral balances with our insurance carriers and anticipate funding further collateral in the future based upon our capital requirements. We classify our restricted cash, cash equivalents and investments as current and noncurrent assets to match against the anticipated timing of payments to carriers.



TRINET	21	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

Working capital for corporate purposes

Corporate working capital as of March 31, 2024 increased $56 million from December 31, 2023, primarily due to the increases in our corporate unrestricted cash and cash equivalents, investments and other current assets, which was driven by our cash flows from operations. The increase in restricted cash, cash equivalents and investments was largely offset by the increase in total current liabilities. These increases were primarily driven by the contribution of HRIS assets into our trust. Refer to Note 1 in Item 1 of this Form 10-Q for more details.

In December of 2023, TriNet created a trust for the purpose of holding funds provided by HRIS clients for the remittance to HRIS Users, tax authorities and other recipients. This trust is consolidated into our financial statements. During the first quarter of 2024, the trust assumed ownership and responsibility of certain bank accounts that hold HRIS client funds. The associated cash is reflected on our balance sheet as restricted cash and the associated liabilities are classified as accrued wages, payroll tax liabilities and other payroll withholdings, and client deposits and other client liabilities and assumed the related liabilities. As of March 31, 2024, the balance of restricted cash in the trust was $113 million.

We use our available cash and cash equivalents to satisfy our operational and regulatory requirements and to fund capital expenditures. We believe that we can meet our present and reasonably foreseeable operating cash needs and future commitments through existing liquid assets, continuing cash flows from corporate operating activities and the potential issuance of debt or equity securities. We hold both corporate cash and cash associated with WSEs across multiple financial institutions to reduce concentrations of counterparty risk. We believe our existing corporate cash and cash equivalents and positive working capital will be sufficient to meet our working capital expenditure needs for at least the next twelve months.

Cash Flows

The following table presents our cash flow activities for the stated periods:


	Three Months Ended March 31,
(in millions)	2024						2023
	Corporate		WSE		Total		Corporate		WSE		Total
Net cash provided by (used in):
Operating activities	$	201	$	(323)	$	(122)	$	169	$	(246)	$	(77)
Investing activities	(47)		—		(47)		(21)		(2)		(23)
Financing activities	(30)		—		(30)		200		—		200

Net increase (decrease) in cash and cash equivalents, unrestricted and restricted	$	124	$	(323)	$	(199)	$	348	$	(248)	$	100
Cash and cash equivalents, unrestricted and restricted:
Beginning of period	$	334	$	1,132	$	1,466	$	406	$	1,131	$	1,537
End of period	$	458	$	809	$	1,267	$	754	$	883	$	1,637

Net increase (decrease) in cash and cash equivalents:
Unrestricted	$	11	$	—	$	11	$	353	$	—	$	353
Restricted	$	113	$	(323)	$	(210)	$	(5)	$	(248)	$	(253)

Operating Activities

Components of net cash used in operating activities are as follows:


	Three Months Ended March 31,
(in millions)	2024		2023
Net cash used in operating activities:	$	(122)	$	(77)
Net cash used in operating activities - WSE	(323)		(246)
Net cash provided by operating activities - Corporate	201		169

The year-over-year change in net cash used in operating activities for WSE purposes was primarily driven by timing of client payments, payments of payroll and payroll taxes and insurance claim activities. We expect the changes in



TRINET	22	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

restricted cash and cash equivalents to correspond to WSE cash provided by (or used in) operations as we manage our obligations associated with WSEs through restricted cash.

Our corporate operating cash flows in the three months ended March 31, 2024 increased, when compared to the same period in 2023, primarily due to the timing of our payments of corporate obligations.

Investing Activities

Cash used in investing activities for the periods presented below primarily consisted of purchases of investments, capital expenditures and acquisition of business, partially offset by proceeds from the sale and maturity of investments.


	Three Months Ended March 31,
(in millions)	2024		2023
Investments:
Purchases of investments	$	(95)	$	(82)
Proceeds from sale and maturity of investments	66		76

Cash used in investments	$	(29)	$	(6)




Cash used in capital expenditures	$	(18)	$	(17)
Cash used in investing activities	$	(47)	$	(23)

Investments

We invest a portion of available cash in investment-grade securities with effective maturities less than five years that are classified on our balance sheets as investments. We consider industry and issuer concentrations in our investment policy.

We also invest funds held as collateral to satisfy our long-term obligation towards workers' compensation liabilities. These investments are classified on our balance sheets as restricted cash, cash equivalents and investments. We review the amount and the anticipated holding period of these investments regularly in conjunction with our estimated long-term workers' compensation liabilities and anticipated claims payment trend. At March 31, 2024, our investments had a weighted average duration of less than two years and an average S&P credit rating of AA+.

As of March 31, 2024, we held approximately $1.8 billion in restricted and unrestricted cash, cash equivalents and investments, of which $298 million was unrestricted cash and cash equivalents and $246 million was unrestricted investments. Refer to Note 2 in the condensed consolidated financial statements and related notes included in this Form 10-Q.

Capital Expenditures

During the three months ended March 31, 2024 and 2023, we continued to make investments in software and hardware and we enhanced our existing service offerings and technology platform. We expect capital investments in our software and hardware to continue in the future.

Financing Activities

Net cash provided by (used in) financing activities in the three months ended March 31, 2024 and 2023 consisted of our debt and equity-related activities.


	Three Months Ended March 31,
(in millions)	2024		2023
Financing activities


Repurchase of common stock, net of issuance costs	$	(30)	$	(95)





Draw down from revolving credit agreement borrowings	—		495
Repayment of revolving credit agreement borrowings	—		(200)
Cash provided by (used in) financing activities	$	(30)	$	200

In February 2023, our board of directors authorized a $300 million incremental increase to our ongoing stock repurchase program initiated in May 2014. In July 2023, our board of directors authorized a further $1 billion incremental increase to this stock repurchase program. We use this program to return value to our stockholders and to offset dilution from the issuance of stock under our equity-based incentive plan and employee purchase plan.



TRINET	23	2024 Q1 FORM 10-Q


MANAGEMENT'S DISCUSSION AND ANALYSIS			Table of Contents

On August 28, 2023, we completed a public tender offer through which we repurchased 5,981,308 shares of common stock at a price of $107.00 per share, for total consideration of approximately $640 million. On September 13, 2023, we repurchased 3,364,486 shares of common stock at a price of $107.00 per share, for total consideration of approximately $360 million, through a private repurchase from our largest stockholder, Atairos Group, Inc.

During the three months ended March 31, 2024, we repurchased 197,872 shares of our common stock for approximately $23 million through our existing stock repurchase program in addition to 59,249 shares acquired to satisfy tax withholding obligations related to SBC vesting. As of March 31, 2024, approximately $409 million remained available for repurchase under all authorizations by our board of directors. We plan to use current cash and cash generated from ongoing operating activities to fund this stock repurchase program.

In March 2023, to ensure that we maintained liquidity during the regional banking liquidity challenges, we drew down the available $495 million of capacity under our 2021 Revolver. As concerns about market liquidity subsided, we repaid $200 million in March and $295 million in April. In September of 2023, we drew down $200 million under our 2021 Revolver to partially fund our share repurchases in the third quarter of 2023 noted above.

In February of 2024, our board of directors declared a cash dividend of $0.25 per share, for a total payment of approximately $13 million paid in April 2024.

Capital Resources

As of March 31, 2024, $500 million and $400 million aggregate principal of our 2029 Notes and 2031 Notes was outstanding, respectively. The indenture governing our 2029 Notes and 2031 Notes each includes restrictive covenants limiting our ability to: (i) create liens on certain assets to secure debt; (ii) grant a subsidiary guarantee of certain debt without also providing a guarantee of the 2029 Notes or 2031 Notes, as applicable; and (iii) consolidate or merge with or into, or sell or otherwise dispose of all or substantially all of our assets to, another person, subject, in each case, to certain customary exceptions.

Our 2021 Credit Agreement includes a $700 million revolver. In September of 2023, we drew down $200 million of this revolver to partially fund our third quarter of 2023 share repurchases. The 2021 Credit Agreement includes negative covenants that limit our ability to incur indebtedness and liens, sell assets and make restricted payments, including dividends and investments, subject to certain exceptions. In addition, the 2021 Credit Agreement also contains other customary affirmative and negative covenants and customary events of default. The 2021 Credit Agreement also contains a financial covenant that requires the Company to maintain certain maximum total net leverage ratios.

We were in compliance with all financial covenants under our 2021 Credit Agreement, 2029 Notes and 2031 Notes at March 31, 2024.

Critical Accounting Policies, Estimates and Judgments

There have been no material changes to our critical accounting policies, estimates and judgments as discussed in our 2023 Form 10-K.

Recent Accounting Pronouncements

Refer to Note 1 in Item 1 of this Form 10-Q.



TRINET	24	2024 Q1 FORM 10-Q


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK AND CONTROLS AND PROCEDURES			Table of Contents

Quantitative and Qualitative Disclosures About Market Risk

Our exposure to changes in interest rates relates primarily to our investment portfolio. Changes in U.S. interest rates affect the interest earned on the Company's cash, cash equivalents and the fair value of our investments.

Our cash equivalents consist primarily of money market mutual funds, which are not significantly exposed to interest rate risk. Our investments are subject to interest rate risk because these securities generally include a fixed interest rate. As a result, the market values of these securities are affected by changes in prevailing interest rates. We attempt to limit our exposure to interest rate risk and credit risk by investing in instruments that meet the minimum credit quality, liquidity, diversification and other requirements of our investment policy. Our investments consist of liquid, investment-grade securities. The risk of rate changes on investment balances was not material at March 31, 2024 and December 31, 2023.

As of March 31, 2024, we had drawn down $200 million under our floating rate 2021 Revolver. The impact of a 100 basis point increase or decrease in market interest rates to interest expense on our 2021 Revolver as of March 31, 2024 over the next twelve months was approximately $2 million.



TRINET	25	2024 Q1 FORM 10-Q


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK AND CONTROLS AND PROCEDURES			Table of Contents

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have, with the participation of our CEO and our CFO, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Based on the evaluation of our disclosure controls and procedures as of March 31, 2024, our CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as of such date in ensuring that (i) information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and CFO, to allow timely decisions regarding required disclosure and (ii) such information is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

We have concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with GAAP.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.



TRINET	26	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

TRINET GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended March 31,
(in millions except per share data)	2024		2023
Professional service revenues	$	214	$	205
Insurance service revenues	1,050		1,041
Total revenues	1,264		1,246
Insurance costs	907		852
Cost of providing services	79		78
Sales and marketing	72		69
General and administrative	48		43
Systems development and programming	18		17
Depreciation and amortization of intangible assets	18		18
Total costs and operating expenses	1,142		1,077
Operating income	122		169
Other income (expense):
Interest expense, bank fees and other	(16)		(7)
Interest income	18		18
Income before provision for income taxes	124		180
Income taxes	33		49
Net income	$	91	$	131
Other comprehensive income (loss), net of income taxes	(3)		3
Comprehensive income	$	88	$	134

Net income per share:
Basic	$	1.80	$	2.18
Diluted	$	1.78	$	2.17
Weighted average shares:
Basic	51		60
Diluted	51		60

See accompanying notes.



TRINET	27	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

TRINET GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


	March 31,		December 31,
(in millions, except share and per share data)	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	298	$	287
Investments	85		65
Restricted cash, cash equivalents and investments	1,059		1,269
Accounts receivable, net	11		18
Unbilled revenue, net	467		447
Prepaid expenses, net	79		67
Other payroll assets	791		381
Other current assets	50		44
Total current assets	2,840		2,578
Restricted cash, cash equivalents and investments, noncurrent	152		158
Investments, noncurrent	161		143
Property and equipment, net	15		17
Operating lease right-of-use asset	22		24
Goodwill	462		462
Software and other intangible assets, net	174		172
Other assets	142		139
Total assets	$	3,968	$	3,693
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and other current liabilities	$	122	$	87
Revolving credit agreement borrowings	109		109

Client deposits and other client liabilities	51		65
Accrued wages	537		515
Accrued health insurance costs, net	167		175
Accrued workers' compensation costs, net	51		50
Payroll tax liabilities and other payroll withholdings	1,611		1,438
Operating lease liabilities	14		14
Insurance premiums and other payables	7		10
Total current liabilities	2,669		2,463
Long-term debt, noncurrent	984		984
Accrued workers' compensation costs, noncurrent, net	120		120
Deferred taxes	13		13
Operating lease liabilities, noncurrent	27		30
Other non-current liabilities	12		5
Total liabilities	3,825		3,615
Commitments and contingencies (see Note 5)
Stockholders' equity:
Preferred stock	—		—
($0.000025 par value per share; 20,000,000 shares authorized; no shares issued or outstanding at March 31, 2024 and December 31, 2023)
Common stock and additional paid-in capital	996		976
($0.000025 par value per share; 750,000,000 shares authorized; 50,573,176 and 50,664,471 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively)
Accumulated deficit	(848)		(896)
Accumulated other comprehensive loss	(5)		(2)
Total stockholders' equity	143		78
Total liabilities & stockholders' equity	$	3,968	$	3,693

See accompanying notes.



TRINET	28	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

TRINET GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)


	Three Months Ended March 31,
(in millions)	2024		2023
Total Stockholders' Equity, beginning balance	$	78	$	775
Common Stock and Additional Paid-In Capital
Beginning balance	976		899




Stock based compensation expense	20		11

Ending balance	996		910

Retained Earnings (Accumulated Deficit)
Beginning balance	(896)		(119)
Net income	91		131
Dividends Declared	(13)		—

Repurchase of common stock	(23)		(91)

Awards effectively repurchased for required employee withholding taxes	(7)		(4)
Ending balance	(848)		(83)

Accumulated Other Comprehensive Income
Beginning balance	(2)		(5)
Other comprehensive income (loss)	(3)		3
Ending balance	(5)		(2)
Total Stockholders' Equity, ending balance	$	143	$	825

See accompanying notes.



TRINET	29	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

TRINET GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Three Months Ended March 31,
(in millions)	2024		2023
Operating activities
Net income	$	91	$	131
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets	18		18
Amortization of deferred costs	11		12
Amortization of ROU asset, lease modification, impairment, and abandonment	2		2
Stock based compensation	20		11


Provision for doubtful accounts	1		1




Changes in operating assets and liabilities:
Accounts receivable, net	6		3
Unbilled revenue, net	(20)		5
Prepaid expenses, net	(12)		(14)
Other assets	(21)		(10)
Other payroll assets	(410)		(180)
Accounts payable and other liabilities	20		30
Client deposits and other client liabilities	(14)		25
Accrued wages	23		(21)
Accrued health insurance costs, net	(7)		(5)
Accrued workers' compensation costs, net	1		(1)
Payroll taxes payable and other payroll withholdings	173		(80)
Operating lease liabilities	(4)		(4)


Net cash used in operating activities	(122)		(77)
Investing activities
Purchases of marketable securities	(95)		(82)
Proceeds from sale and maturity of marketable securities	66		76
Acquisitions of property and equipment and projects in process	(18)		(17)

Net cash used in investing activities	(47)		(23)
Financing activities
Repurchase of common stock	(23)		(91)




Awards effectively repurchased for required employee withholding taxes	(7)		(4)
Proceeds from revolving credit agreement borrowings	—		495




Repayment of revolving credit agreement borrowings	—		(200)

Net cash provided by (used in) financing activities	(30)		200

Net change in cash and cash equivalents, unrestricted and restricted	(199)		100
Cash and cash equivalents, unrestricted and restricted:
Beginning of period	1,466		1,537
End of period	$	1,267	$	1,637

Supplemental disclosures of cash flow information
Interest paid	$	26	$	11
Income taxes paid, net	$	7	$	4
Supplemental schedule of noncash investing and financing activities
Cash dividend declared, but not yet paid	$	13	$	—
Payable for purchase of property and equipment	$	3	$	5

See accompanying notes.



TRINET	30	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

TriNet Group, Inc. (TriNet, or the Company, we, our and us) provides comprehensive HCM solutions for small and medium-size businesses under both a PEO model and an HRIS services model. These HCM solutions include multi-state payroll processing and tax administration, employee benefits programs, including health insurance and retirement plans, workers' compensation insurance and claims management, employment and benefit law compliance, and other HR-related services. Through our PEO service model, we are the employer of record for certain employment-related administrative and regulatory purposes for WSEs, including:

•compensation through wages and salaries,

•certain employer payroll-related tax payments,

•employee payroll-related tax withholdings and payments,

•employee benefit programs, including health and life insurance, and

•workers' compensation coverage.

Our PEO clients are responsible for the day-to-day job responsibilities of the WSEs.

Through our HRIS services model, we provide cloud-based HCM services to SMBs that allows them to manage hiring, onboarding, employee information, payroll processing, payroll tax administration, health insurance, and other benefits, from a single cloud-based software platform. We are not the co-employer or employer of record for such employees.

We operate in one reportable segment. All of our service revenues are generated from external clients. Less than 1% of our revenue is generated outside of the U.S.

Basis of Presentation and Basis of Consolidation

These unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission. The unaudited condensed consolidated financial statements include the accounts of the Company and an entity consolidated under the variable interest model. Intercompany balances and transactions have been eliminated. Certain information and note disclosures included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, that are normal and recurring in nature, necessary for fair financial statement presentation. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the operating results anticipated for the full year. These financial statements should be read in conjunction with the audited Consolidated Financial Statements included in Part II, Item 8. Financial Statements and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2023. Certain prior year amounts have been reclassified to conform to current period presentation.

When entering into contractual arrangements with other entities, we assess whether we have a variable interest. If we determine that we have a variable interest, we then determine whether the arrangement is with a variable interest entity ("VIE"). If the arrangement is with a VIE, we assess whether we are the primary beneficiary of the VIE by identifying the most significant activities and determining who has the power over those activities and who has the obligation to absorb the majority of the losses or benefits of the VIE. We consolidate a VIE when we have the power to direct activities that most significantly affect the economic performance of the VIE and have the obligation to absorb the majority of their losses or benefits, making us the primary beneficiary.

Periodically, we assess whether any changes in our interest or relationship with the entity affect our determination of whether the entity is a VIE and, if so, whether we are the primary beneficiary.

In December 2023, we created a trust ("the Trust") for the purpose of holding HRIS clients' payroll funds for the remittance to HRIS Users, tax authorities and other recipients. The Trust's assets are restricted and can only be used for payments on behalf of HRIS clients, payments on behalf of the HRIS Users, repayments of any advances from TriNet, or payments to TriNet of interest income earned on the balances of the Trust. In the event of any



TRINET	31	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

losses, creditors to the Trust have recourse to the Trust's property and not that of TriNet overall. The risks associated with the Trust are similar to those that currently exist for the Company such as banking losses in excess of FDIC insurance levels, interest rate and market conditions.

We determined that this Trust meets the definition of a variable interest entity and as the primary beneficiary we have both the power to direct the Trust’s activities that most significantly affect its performance and we have the right to receive benefits from the Trust, in the form of interest income. As a result, this Trust is consolidated into our financial statements. During the first quarter of 2024, the Trust assumed ownership and responsibility of certain bank accounts that hold HRIS client funds and assumed the related liabilities.

The following table presents the assets and liabilities of the Trust which are included in our consolidated balance sheet. These amounts on any particular date can vary due to timing of cash receipts and remittance to HRIS users and payroll tax agencies.


	March 31,
(in millions)	2024
ASSETS
Current assets:
Cash and cash equivalents	$	1
Restricted cash, cash equivalents and investments	113

Total current assets	114
Total assets	$	114
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities	$	1


Accrued wages	15
Payroll tax liabilities and other payroll withholdings	98

Total current liabilities	114
Total liabilities	$	114

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect certain reported amounts and related disclosures.

These estimates are based on historical experience and on various other assumptions that we believe to be reasonable from the facts available to us. Some of the assumptions are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our condensed consolidated financial statements could be materially affected.

Revenue Recognition

Variable Consideration and Pricing Allocation

From time to time, we may offer credits to our clients considered to be variable consideration. Incentive credits related to contract renewals are recorded as a reduction to revenue as part of the transaction price at contract inception and are allocated among the performance obligations based on their relative standalone selling prices.

We allocate the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised services underlying each performance obligation. The transaction price for the payroll and payroll tax processing performance obligations is determined upon establishment of the contract that contains the final terms of the arrangement, including the description and price of each service purchased. The estimated service fee is determined based on observable inputs and includes the following key assumptions: target profit margin, pricing strategies including the mix of services purchased and competitive factors, and client and industry specifics.

The fees for access to health benefits and workers' compensation insurance performance obligations are determined during client on-boarding and annually through the enrollment processes based on the types of benefits coverage the WSEs have elected and the applicable risk profile of the client. We estimate our service fees based on actuarial forecasts of our expected insurance premiums and loss sensitive premium costs and amounts to cover our costs to administer these programs.



TRINET	32	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

We require our clients to prefund payroll and related taxes and other withholding liabilities before payroll is processed or due for payment. Under the provision of our contracts with clients, we generally will process the payment of a client’s payroll only when the client successfully funds the amount required. As a result, there is no financing arrangement for the contracts. However, certain contracts to provide payroll and payroll tax processing services permit the client to pay certain payroll tax components ratably over periods of up to 12 months rather than as payroll tax is otherwise determined and due, which may be considered a significant financing arrangement under FASB ASC Topic 606 Revenue from Contracts with Customers. However, as the period between our performing the service under the contract and when the client pays for the service is less than one year, we have elected, as a practical expedient, not to adjust the transaction price.

In previous years, we created our Recovery Credits to assist in the economic recovery of our existing PEO clients and enhance our ability to retain these clients. These credits were based on the performance of our insurance costs and were recorded as a reduction to insurance services revenues and included in client deposits and other client liabilities on the balance sheets. The change in balance for the liability for credits previously accrued is the following:


	Three Months Ended March 31,
(in millions)	2024		2023
Balance at beginning of period	$	7	$	75
(+) Accruals	—		—
(-) Distributions to clients	(7)		(8)
Balance at end of period	$	—	$	67

Accrued Health Insurance Costs

We sponsor and administer a number of employee benefit plans for our PEO WSEs, including group health, dental, and vision as an employer plan sponsor under section 3(5) of the ERISA. In the three months ended March 31, 2024, the majority of our group health insurance costs were related to risk-based plans. Our remaining group health insurance costs were for guaranteed-cost policies.

Accrued health insurance costs are established to provide for the estimated unpaid costs of reimbursing the carriers for paying claims within the deductible layer in accordance with risk-based health insurance policies. These accrued costs include estimates for claims incurred but not paid. We assess accrued health insurance costs regularly based upon actuarial studies that include other relevant factors such as current and historical claims payment patterns, plan enrollment and medical trend rates.

In certain carrier contracts we are required to prepay our obligations for the expected claims activity for subsequent periods. These prepaid balances by agreement permit net settlement of obligations and offset the accrued health insurance costs. As of March 31, 2024 and December 31, 2023, prepayments and miscellaneous receivables offsetting accrued health insurance costs were $65 million and $58 million, respectively. When the prepaid amount is in excess of our recorded liability the net asset position is included in prepaid expenses. As of March 31, 2024 and December 31, 2023, accrued health insurance costs offsetting prepaid expenses were $71 million and $68 million, respectively.

Restricted Cash, Cash Equivalents and Investments

Restricted cash, cash equivalents and investments presented on our consolidated balance sheets include:

•cash and cash equivalents in Trust accounts functioning as security deposits for our insurance carriers,

•payroll funds collected representing cash collected in advance from clients which we designate as restricted for the purpose of funding WSE and HRIS User payroll and payroll taxes and other payroll related liabilities, and

•amounts held in Trust for current and future premium and claim obligations with our insurance carriers, which amounts are held in Trust according to the terms of the relevant insurance policies and by the local insurance regulations of the jurisdictions in which the policies are in force.

Recent Accounting Pronouncements

Recently issued accounting guidance



TRINET	33	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

Income Taxes

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The ASU is effective for TriNet on a prospective basis for annual periods beginning after December 15, 2024. We are currently evaluating the provisions of this ASU.

Segment Reporting

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which will require the Company to disclose segment expenses that are significant and regularly provided to the Company’s chief operating decision maker (“CODM”). In addition, ASU 2023-07 will require the Company to disclose the title and position of its CODM and how the CODM uses segment profit or loss information in assessing segment performance and deciding how to allocate resources. The ASU is effective for TriNet for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently evaluating the provisions of this ASU.



TRINET	34	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

NOTE 2. CASH, CASH EQUIVALENTS AND INVESTMENTS - UNRESTRICTED AND RESTRICTED

Under the terms of the agreements with certain of our workers' compensation and health benefit insurance carriers, we are required to maintain collateral in Trust accounts for the benefit of specified insurance carriers and to reimburse the carriers’ claim payments within our deductible layer. We invest a portion of the collateral amounts in marketable securities. We report the current and noncurrent portions of these Trust accounts as restricted cash, cash equivalents and investments on the consolidated balance sheets.

We require our clients to prefund their payroll and related taxes and other withholding liabilities before payroll is processed or due for payment. This prefund, for PEO customers, as well as amounts held by our statutory Trust for our HRIS Users, is included in restricted cash, cash equivalents and investments as payroll funds collected, which is designated to pay pending payrolls, payroll tax liabilities and other payroll withholdings.

We also invest available corporate funds, primarily in fixed income securities which meet the requirements of our corporate investment policy and are classified as AFS.

Our total cash, cash equivalents and investments are summarized below:


	March 31, 2024						December 31, 2023
(in millions)	Cash and cash equivalents		Available-for-sale marketable securities		Total			Cash and cash equivalents		Available-for-sale marketable securities		Total
Cash and cash equivalents	$	298	$	—	$	298		$	287	$	—	$	287
Investments	—		85		85			—		65		65
Restricted cash, cash equivalents and investments:
Payroll funds collected	743		—		743			1,067		—		1,067
Collateral for health benefits claims	32		114		146			31		113		144
Collateral for workers' compensation claims	55		—		55			54		2		56
Trust for our HRIS Users	113		—		113			—		—		—
Other security deposits	2		—		2			2		—		2
Total restricted cash, cash equivalents and investments	945		114		1,059			1,154		115		1,269
Investments, noncurrent	—		161		161			—		143		143
Restricted cash, cash equivalents and investments, noncurrent
Collateral for workers' compensation claims	24		128		152			25		133		158

Total	$	1,267	$	488	$	1,755		$	1,466	$	456	$	1,922



TRINET	35	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

NOTE 3. INVESTMENTS

The following tables summarize our financial instruments by significant categories and fair value measurement on a recurring basis as of March 31, 2024 and December 31, 2023 and the amortized cost, gross unrealized gains, gross unrealized losses, fair value of our AFS investments:


(in millions)	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash, Cash Equivalents and Investments
March 31, 2024
Cash equivalents:
Money market mutual funds	Level 1	$	327	$	—	$	—	$	327	$	40	$	—	$	287
U.S. treasuries	Level 2	4		—		—		4		1		—		3
Total cash equivalents		331		—		—		331		41		—		290
AFS Investments:
Asset-backed securities	Level 2	38		—		—		38		—		38		—
Corporate bonds	Level 2	148		—		—		148		—		115		33
Agency securities	Level 2	37		—		(1)		36		—		8		28
U.S. treasuries	Level 2	260		—		(4)		256		—		77		179
Certificate of deposit	Level 2	2		—		—		2		—		—		2
Other debt securities	Level 2	8		—		—		8		—		8		—
Total AFS Investments		$	493	$	—	$	(5)	$	488	$	—	$	246	$	242


(in millions)	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Investments		Restricted Cash, Cash Equivalents and Investments
December 31, 2023
Cash equivalents:
Money market mutual funds	Level 1	$	183	$	—	$	—	$	183	$	96	$	—	$	87
U.S. treasuries	Level 2	7		—		—		7		5		—		2
Total cash equivalents		190		—		—		190		101		—		89
AFS Investments:
Asset-backed securities	Level 2	41		—		(1)		40		—		40		—
Corporate bonds	Level 2	135		1		—		136		—		103		33
Agency securities	Level 2	40		—		(1)		39		—		10		29
U.S. treasuries	Level 2	231		1		(1)		231		—		47		184
Certificate of deposit	Level 2	2		—		—		2		—		—		2
Other debt securities	Level 2	8		—		—		8		—		8		—
Total AFS Investments		$	457	$	2	$	(3)	$	456	$	—	$	208	$	248

Fair Value of Financial Instruments

We use an independent pricing source to determine the fair value of our securities. The independent pricing source utilizes various pricing models for each asset class, including the market approach. The inputs and assumptions for the pricing models are market observable inputs including trades of comparable securities, dealer quotes, credit spreads, yield curves and other market-related data.

We have not adjusted the prices obtained from the independent pricing service and we believe the prices received from the independent pricing service are representative of the prices that would be received to sell the assets at the measurement date (exit price).



TRINET	36	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

The carrying value of the Company's cash equivalents and restricted cash equivalents approximate their fair values due to their short-term maturities.

We did not have any Level 3 financial instruments recognized in our condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023. There were no transfers between levels as of March 31, 2024 and December 31, 2023.

Sales and Maturities

The fair value of debt investments by contractual maturity are shown below:


(in millions)	March 31, 2024
One year or less	$	113
Over one year through five years	347
Over five years through ten years	10
Over ten years	18
Total fair value	$	488

The gross proceeds from sales and maturities of AFS securities for the three months ended March 31, 2024 and March 31, 2023 are presented below. We had immaterial gross realized gains and losses from sales of investments for the first quarter of 2024 and immaterial gross realized gains for the first quarter of 2023.


	Three Months Ended March 31,
(in millions)	2024		2023


Gross proceeds from sales	$	39	$	32
Gross proceeds from maturities	27		44
Total	$	66	$	76

Fair Value of Long-Term Debt

The fair value of our 2029 Notes and 2031 Notes was obtained from a third-party pricing service and is based on observable market inputs. As such, the fair value of the senior notes is considered Level 2 in the hierarchy for fair value measurement. As of March 31, 2024, our 2029 Notes and 2031 Notes were carried at their cost, net of issuance costs, and had a fair value of $449 million and $411 million, respectively. As of December 31, 2023, our 2029 Notes and 2031 Notes were carried at their cost, net of issuance costs, and had a fair value of $443 million and $414 million, respectively.

Our 2021 Revolver is a floating rate debt. At March 31, 2024 and December 31, 2023, the fair value of our 2021 Revolver approximated its carrying value (exclusive of issuance costs). The fair value of our floating rate debt is estimated based on a discounted cash flow, which incorporates credit spreads, market interest rates and contractual maturities to estimate the fair value and is considered Level 3 in the hierarchy for fair value measurement.



TRINET	37	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

NOTE 4. ACCRUED WORKERS' COMPENSATION COSTS

The following table summarizes the accrued workers’ compensation cost activity for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
(in millions)	2024		2023
Total accrued costs, beginning of period	$	175	$	189
Incurred
Current year	16		16
Prior years	(4)		(6)
Total incurred	12		10
Paid
Current year	(1)		(1)
Prior years	(11)		(11)
Total paid	(12)		(12)
Total accrued costs, end of period	$	175	$	187

The following summarizes workers' compensation liabilities on the condensed consolidated balance sheets:


(in millions)	March 31, 2024		December 31, 2023
Total accrued costs, end of period	$	175	$	175
Collateral paid to carriers and offset against accrued costs	(4)		(5)
Total accrued costs, net of carrier collateral offset	$	171	$	170

Payable in less than 1 year (net of collateral paid to carriers of $1 and $1 at March 31, 2024 and December 31, 2023, respectively)	$	51	$	50
Payable in more than 1 year (net of collateral paid to carriers of $3 and $4 at March 31, 2024 and December 31, 2023, respectively)	120		120
Total accrued costs, net of carrier collateral offset	$	171	$	170

Incurred claims related to prior years represent changes in estimates for ultimate losses on workers' compensation claims. For the three months ended March 31, 2024, the favorable development is due to lower than expected reported claim frequency and severity for the more recent years.

As of March 31, 2024 and December 31, 2023, we had $31 million and $32 million of collateral held by insurance carriers of which $4 million and $5 million, respectively, was offset against accrued workers' compensation costs as the agreements permit and are net settled of insurance obligations against collateral held.

NOTE 5. COMMITMENTS AND CONTINGENCIES

Contingencies

We are and, from time to time, have been and may in the future become involved in various litigation matters, legal proceedings, and claims arising in the ordinary course of our business, including disputes with our clients or various class action, collective action, representative action, and other proceedings arising from the nature of our co-employment relationship with our clients and WSEs in which we are named as a defendant. In addition, due to the nature of our co-employment relationship with our clients and WSEs, we could be subject to liability for federal and state law violations, even if we do not participate in such violations. While our agreements with our clients contain indemnification provisions related to the conduct of our clients, we may not be able to avail ourselves of such provisions in every instance. We have accrued our current best estimates of probable losses with respect to these matters, which are individually and in aggregate immaterial to our consolidated financial statements.

While the outcome of the matters described above cannot be predicted with certainty, management currently does not believe that any such claims or proceedings will have a materially adverse effect on our consolidated financial position, results of operations, or cash flows. However, the unfavorable resolution of any particular matter or our reassessment of our exposure for any of the above matters based on additional information obtained in the future could have a material impact on our consolidated financial position, results of operations, or cash flows.



TRINET	38	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents

NOTE 6. STOCK BASED COMPENSATION

Restricted Stock Units (RSUs)

Time-based RSUs generally vest over a four-year term. Performance-based RSUs are subject to vesting requirements and are earned, in part, based on certain financial performance metrics as defined in the grant notice. Actual number of shares earned may range from 0% to 200% of the target award. Performance-based awards granted in 2024 and 2023 are earned based on a single-year performance period subject to subsequent multi-year time-based vesting with 50% of the shares earned vesting in one year after the performance period and the remaining shares in the year after. RSUs are generally forfeited if the participant terminates service prior to vesting.

The following tables summarize RSU activity for the three months ended March 31, 2024:

Time-based RSUs



	Total Number of Shares	Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2023	1,229,202	$	80.88
Granted	488,872	125.52
Vested	(155,051)	76.36
Forfeited	(18,289)	83.55
Nonvested at March 31, 2024	1,544,734	$	95.43

Performance-based RSUs


	Total Number of Shares	Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2023	223,011	$	81.08
Granted	129,631	125.65
Vested	(5,067)	92.53

Forfeited	(2,598)	77.00
Nonvested at March 31, 2024	344,977	$	97.69

Stock Based Compensation

Stock based compensation expense for stock-based awards made to our employees pursuant to our equity plans were as follows:


	Three Months Ended March 31,
(in millions)	2024		2023
Cost of providing services	$	4	$	3
Sales and marketing	3		2
General and administrative	12		5
Systems development and programming costs	1		1
Total stock based compensation expense	$	20	$	11
Total stock based compensation capitalized	$	1	$	1

NOTE 7. STOCKHOLDERS’ EQUITY

Common Stock

The following table shows the beginning and ending balances of our issued and outstanding common stock for the three months ended March 31, 2024 and 2023:



TRINET	39	2024 Q1 FORM 10-Q


FINANCIAL STATEMENTS			Table of Contents


	Three Months Ended March 31,
	2024	2023
Shares issued and outstanding, beginning balance	50,664,471	60,555,661
Issuance of common stock from vested restricted stock units	160,118	135,074
Issuance of common stock from exercise of stock options	5,708	39,791


Repurchase of common stock	(197,872)	(1,157,871)
Awards effectively repurchased for required employee withholding taxes	(59,249)	(49,701)
Shares issued and outstanding, ending balance	50,573,176	59,522,954

Stock Repurchases

As of March 31, 2024, there is $409 million remaining in the total authorization of $2,715 million of our ongoing stock repurchase program.

Dividends

In February 2024, our board of directors authorized a dividend of $0.25 per share for an aggregate amount of approximately $13 million paid in April 2024.

NOTE 8. INCOME TAXES

We are subject to tax in U.S. federal and various state and local jurisdictions, as well as Canada and India. We are open to federal and significant state income tax examinations for tax years 2018 and subsequent years.

NOTE 9. EARNINGS PER SHARE

Basic EPS is computed based on the weighted average shares of common stock outstanding during the period. Diluted EPS is computed based on those shares used in the basic EPS computation, plus potentially dilutive shares issuable under our equity-based compensation plans using the treasury stock method. Shares that are potentially anti-dilutive are excluded.

The following table presents the computation of our basic and diluted EPS attributable to our common stock:


	Three Months Ended March 31,
(in millions, except per share data)	2024		2023
Net income	$	91	$	131
Weighted average shares of common stock outstanding	51		60
Basic EPS	$	1.80	$	2.18
Net income	$	91	$	131
Weighted average shares of common stock outstanding	51		60
Dilutive effect of stock options and restricted stock units	—		—
Weighted average shares of common stock outstanding	51		60
Diluted EPS	$	1.78	$	2.17

Common stock equivalents excluded from income per diluted share because of their anti-dilutive effect	1		2



TRINET	40	2024 Q1 FORM 10-Q


OTHER INFORMATION			Table of Contents

Legal Proceedings

For the information required in this section, refer to Note 5 in the condensed consolidated financial statements and related notes included in this Form 10-Q.

Risk Factors

There have been no material changes in our risk factors disclosed in Part 1, Item 1A, of our 2023 Form 10-K.

Unregistered Sales of Equity Securities and Use of Proceeds

(a) Sales of Unregistered Securities

Not applicable.

(b) Use of Proceeds from Sales of Unregistered Securities

Not applicable.

The following table provides information about our purchases of TriNet common stock during the quarter ended March 31, 2024:


Period	Total Number of Shares Purchased (2)	Weighted Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans (1)	Approximate Dollar Value ($ millions) of Shares that May Yet be Purchased Under the Plans (3)
January 1 - January 31, 2024	74,713	$	115.61	70,464	$	425
February 1 - February 29, 2024	143,018	$	114.75	88,530	$	414
March 1 - March 31, 2024	39,390	$	128.04	38,878	$	409
Total	257,121			197,872

(1) In May 2014, our board of directors approved a stock repurchase program pursuant to which we are authorized to repurchase our common stock in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934. From time to time, our board of directors authorizes increases to our stock repurchase program and approved an aggregate total of $2,715 million as of March 31, 2024. The total remaining authorization for future stock repurchases under our stock repurchase program was $409 million as of March 31, 2024. The program does not have an expiration date.

(2) Includes shares surrendered by employees to us to satisfy tax withholding obligations that arose upon vesting of restricted stock units granted pursuant to approved plans.

(3) We repurchased a total of approximately $23 million of our outstanding stock during the three months ended March 31, 2024.

We use our stock repurchase program to return value to our stockholders and to offset dilution from the issuance of stock under our equity-based incentive plans and employee purchase plan. We plan to use current cash and cash generated from ongoing operating activities to fund our stock repurchase program.

Defaults Upon Senior Securities

Not applicable.

Mine Safety Disclosures

Not applicable.

Other Information

On February 23, 2024, Burton M. Goldfield, a member of the Board of Directors, adopted a new written trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (the “Goldfield Plan”). The first possible trade date under the Goldfield Plan is May 28, 2024, and the end date of the Goldfield Plan is February 28, 2025 (subject to customary exceptions), for a duration of approximately one year. The Goldfield Plan calls for the sale of an amount of shares that Mr. Goldfield could receive upon the future vesting of certain outstanding equity awards, net of any shares withheld by us to satisfy applicable taxes. The exact number of shares to be sold pursuant to the Goldfield Plan depends on the number of shares to be withheld by us on equity awards that will vest during the duration of the Goldfield Plan, among other factors. For purposes of this disclosure, without



TRINET	41	2024 Q1 FORM 10-Q


OTHER INFORMATION			Table of Contents

subtracting any shares to be withheld upon future vesting events, the aggregate number of shares currently expected to be sold pursuant to the Goldfield Plan is 74,379.



TRINET	42	2024 Q1 FORM 10-Q


EXHIBITS			Table of Contents

Exhibits

Incorporated herein by reference is a list of the exhibits contained in the Exhibit Index below.

EXHIBIT INDEX

Incorporated by Reference

Exhibit No.

Exhibit

Form

File No.

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation of TriNet Group, Inc.

8-K

001-36373

3.1

5/30/2023

3.2

Amended and Restated Bylaws of TriNet Group, Inc.

8-K

001-36373

3.1

3/27/2023

4.1

Registration Rights Agreement, by and between TriNet Group, Inc. and AGI-T, L.P., dated as of February 1, 2017.

8-K

001-36373

4.1

2/2/2017

4.2

Indenture, dated August 16, 2023, among the Company, the guarantors listed therein and U.S. Bank Trust Company, National Association, as trustee

8-K

001-36373

4.1

8/16/2023

4.3

First Supplemental Indenture, dated August 16, 2023, to the Indenture dated February 26, 2021, among the guarantors listed therein and U.S. Bank Trust Company, National Association as trustee

10-Q

001-36373

4.3

10/25/2023

10.1

Employment Agreement between TriNet Group, Inc. and Michael Q. Simonds, dated February 12, 2024

8-K

001-36373

10.1

2/15/2024

10.2

Transition Agreement between TriNet Group, Inc. and Burton M. Goldfield, dated February 13, 2024

8-K

001-36373

10.1

2/15/2024

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

XBRL Taxonomy Extension Schema Linkbase Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded with the Inline XBRL document)



*			Document has been furnished, is deemed not filed and is not to be incorporated by reference into any of TriNet Group, Inc.’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, irrespective of any general incorporation language contained in any such filing.



TRINET	43	2024 Q1 FORM 10-Q


SIGNATURES			Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	TRINET GROUP, INC.

Date: April 26, 2024		By:	/s/ Michael Q. Simonds
			Michael Q. Simonds
			Chief Executive Officer

Date: April 26, 2024		By:	/s/ Kelly Tuminelli
			Kelly Tuminelli
			Chief Financial Officer



TRINET	44	2024 Q1 FORM 10-Q

Get the next $TNET alert in real time by email

Date	Price Target	Rating	Analyst
12/5/2025	$62.00	Hold	Truist
2/18/2025	$104.00 → $74.00	Buy → Hold	TD Cowen
10/28/2024		Buy → Hold	Needham
10/22/2024	$103.00	Underweight	JP Morgan
11/7/2023	$110.00	Neutral	UBS
8/7/2023	$95.00 → $125.00	Market Perform → Outperform	TD Cowen
5/12/2023	$115.00	Buy	Needham
9/8/2022	$83.00	Market Perform	Cowen

SEC Form 10-Q filed by TriNet Group Inc.

Crush Q1 2026 with the Best AI Superconnector

Recent Analyst Ratings for
$TNET

$TNET
SEC Filings

TriNet Group Inc. filed SEC Form 8-K: Other Events, Financial Statements and Exhibits