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Published: 2022-10-25 16:19:33 ET
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EX-99.1 2 tnet-093022xexhibit991.htm EX-99.1 Document

TriNet Announces Third Quarter 2022 Results

8% Growth in Total Revenues to $1.2 Billion
21% Growth in Professional Service Revenues to $189 million
Net Income per Diluted Share of $1.22 and Adjusted Net Income per Diluted Share $1.64

DUBLIN, Calif. — October 25, 2022 — TriNet Group, Inc. (NYSE: TNET), a leading provider of comprehensive human resources solutions for small and medium-size businesses, today announced financial results for the third quarter ended September 30, 2022. The third quarter highlights below include non-GAAP financial measures which are reconciled later in this release.
Third quarter highlights include:
•Total revenues increased 8% to $1.2 billion as compared to the same period last year.
•Professional service revenues increased 21% to $189 million as compared to the same period last year.
•Net income was $77 million, or $1.22 per diluted share, compared to net income of $77 million, or $1.16 per diluted share, in the same period last year.
•Adjusted Net Income was $104 million, or $1.64 per diluted share, compared to Adjusted Net Income of $87 million, or $1.31 per diluted share, in the same period last year.
•Adjusted EBITDA was $173 million, compared to Adjusted EBITDA of $132 million, in the same period last year.
•Average PEO WSEs increased 1% as compared to the same period last year, to approximately 352,000.
•Average HCM Users for the period was approximately 247,000.
•At September 30, 2022, TriNet had cash and cash equivalents of $454 million and total debt of $496 million.

“During the Third Quarter, TriNet delivered an expanded product line while achieving strong financial performance,” said Burton M. Goldfield, TriNet’s President and CEO. “We are enhancing our product offering to augment our PEO and HCM solutions at the request of our vibrant customer base. Through our acquisition of Clarus R&D and the launch of our TriNet Enrich product line, we were able to do just that.Clarus R&D enables customers to efficiently procure R&D tax credits, while TriNet Enrich allows customers to offer unique benefit offerings typically not available to SMBs. Ultimately, this creates lasting value for both our customers and shareholders”

Mr. Goldfield continued, “While we are not immune from the current economic uncertainty, TriNet will continue to innovate and operate in the best interests of all of our stakeholders. We remain focused on delivering strong financial performance, while investing in our business to drive long-term growth.”


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Third Quarter and Full-Year 2022 Guidance
In addition to announcing our third quarter 2022 results, we provide our third quarter and full-year 2022 guidance. Non-GAAP financial measures are reconciled later in this release. Percentages reflect the increase or (decrease) from the prior year quarter and prior year end.
Q4 2022Full Year 2022
LowHighLowHigh
Total Revenues(2)%— %7 %8 %
Professional Service Revenues7 %10 %17 %18 %
Insurance Cost Ratio93.0 %97.0 %86.0 %85.0 %
Diluted net income (loss) per share of common stock$(0.47)$0.07 $4.30 $4.85 
Adjusted Net Income per share - diluted$— $0.50 $5.90 $6.40 
Quarterly Report on Form 10-Q
We anticipate filing our Quarterly Report on Form 10-Q (“Form 10-Q”) for the nine months ended September 30, 2022 with the U.S. Securities and Exchange Commission (SEC) and making it available at http://www.trinet.com today, October 25, 2022. This press release should be read in conjunction with the Form 10-Q and the related Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Form 10-Q.
Earnings Conference Call and Audio Webcast
TriNet will host a conference call at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its third quarter results for 2022 and provide fourth quarter and full-year financial guidance for 2022. TriNet encourages participants to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. To pre-register, go to: https://dpregister.com/sreg/10171809/f4a87c2629. For those who would like to join the call but have not pre-registered, they can do so by dialing +1 (412) 317-5426 and requesting the “TriNet Conference Call.” The live webcast of the conference call can be accessed on the Investor Relations section of TriNet’s website at http://investor.trinet.com. A replay of the webcast will be available on this website for approximately one year. A telephonic replay will be available for two weeks following the conference call at +1 (412) 317-0088 conference ID: 1522960.
About TriNet
TriNet provides small and medium-size businesses (SMBs) with full-service HR solutions tailored by industry. To free SMBs from HR complexities, TriNet offers access to human capital expertise, benefits, risk mitigation and compliance, payroll, 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, Employee Engagement, Payroll and Time & Attendance. From Main Street to Wall Street, TriNet empowers SMBs to focus on what matters most—growing their business and enabling their people. TriNet, incredible starts here. For more information, visit TriNet.com or follow us on Twitter.

Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to TriNet’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section titled “Non-GAAP Financial Measures.”

2

Forward-Looking Statements
This press release contains, and statements made during the above referenced conference call will contain, statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among other things, TriNet’s expectations and assumptions regarding: TriNet's financial guidance for the third quarter and full-year 2022 and the underlying assumptions, the value to customers and shareholders of TriNet's product offerings, including Clarus R&D and TriNet enrich, TriNet's financial performance and long-term growth, and the extent, length and growth impact of current economic uncertainty. Forward-looking statements are often identified by the use of words such as, but not limited to, “ability,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” "guidance," “impact,” “intend,” “may,” “plan,” "predict," “project,” “seek,” “should,” “strategy,” “target,” “value,” “will,” “would” and similar expressions or variations. Examples of forward-looking statements include, among others, TriNet’s expectations regarding the impact of its enhanced product offerings, the acquisition of Clarus R&D and the launch of TriNet Enrich on its customers and shareholders and TriNet's expectation regarding its future financial performance, and long-term growth in light of current economic uncertainty. These statements are not guarantees of future performance, but are based on management’s expectations as of the date hereof and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from our current expectations and any past or future results, performance or achievements. Investors are cautioned not to place undue reliance upon any forward-looking statements.
Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: the economic, health and business disruption caused by the COVID-19 pandemic; the impact of the COVID-19 pandemic on our clients and prospects, insurance costs and operations; the impact of the COVID-19 pandemic on the laws and regulations that impact our industry and clients; our ability to manage unexpected changes in workers’ compensation and health insurance claims and costs by worksite employees; our ability to mitigate the 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 and the concentration of our clients in certain geographies and industries; loss of clients for reasons beyond our control; 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 we rely upon; the impact of our client Recovery Credit Programs, including our 2021 and 2022 Credit Programs; adverse changes in our insurance coverage or our relationships with key insurance carriers; our ability to improve our services and technology to satisfy regulatory requirements and meet the expectations of our clients and manage client attrition; our ability to effectively integrate businesses we have acquired or may acquire in the future; our ability to effectively manage and improve our operational processes; 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 and security breaches; our ability to secure our information technology infrastructure and our confidential, sensitive and personal information; our ability to comply with constantly 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 under federal and state regulations; changes in the laws and regulations that govern what it means to be an employer, employee or independent contractor; our ability to comply with the laws and regulations that govern PEOs and other similar industries; the outcome of existing and future legal and tax proceedings; fluctuation in our results of operations and stock price due to factors outside of our control, such as the volume and severity of our workers’ compensation and health insurance claims and the amount and timing of our insurance costs, operating expenses and capital expenditure requirements; 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. Any of these factors could cause our actual results to differ materially from our anticipated results.


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Further information on risks that could affect TriNet’s results is included in our filings with the SEC, including under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on our investor relations website at http://investor.trinet.com and on the SEC website at www.sec.gov. Copies of these filings are also available by contacting TriNet Corporation's Investor Relations Department at (510) 875-7201. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements in this press release, and any forward-looking statements in this press release speak only as of the date of this press release. In addition, we do not assume any obligation, and do not intend, to update any of our forward-looking statements, except as required by law.

Contacts: 
Investors:Media:
Alex BauerRenee Brotherton
TriNetTriNet
Alex.Bauer@TriNet.comRenee.Brotherton@TriNet.com
(510) 875-7201
(925) 965-8441
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FINANCIAL HIGHLIGHTS
Key Financial and Operating Metrics
We regularly review certain key financial and operating metrics to evaluate growth trends, measure our performance and make strategic decisions. These key financial and operating metrics may change over time. Our key financial and operating metrics for the periods presented were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except per share and Operating Metrics data)20222021% Change20222021% Change
Income Statement Data:
Total revenues$1,241 $1,148 8 %$3,659 $3,308 11 %
Operating income120 105 14 443 364 22 
Net income77 77 — 307 269 14 
Diluted net income per share of common stock1.22 1.16 5 4.81 4.03 19 
Non-GAAP measures (1):
Adjusted EBITDA 173 132 31 576 449 28 
Adjusted Net income 104 87 20 378 302 25 
Operating Metrics:
Insurance Cost Ratio83 %86 %(3)%82 %84 %(2)%
Average WSEs351,888 347,502 1 348,833 333,839 4 
Total WSEs at period end351,839 351,267 — 351,839 351,267 — 
Average HCM Users247,375 N/AN/A250,731 N/AN/A
(1) Refer to Non-GAAP measures definitions and reconciliations from GAAP measures under the heading "Non-GAAP Financial Measures".
(in millions)September 30, 2022December 31, 2021% Change
Balance Sheet Data:
Working capital$444 700 (37)%
Total assets3,079 3,309 (7)
Debt496 495 — 
Total stockholders’ equity856 881 (3)
Nine Months Ended September 30,
(in millions)20222021% Change
Cash Flow Data:
Net cash provided by (used in) operating activities$76 $(16)(575)%
Net cash used in investing activities(205)(145)41 
Net cash provided by (used in) financing activities(392)20 (2,060)
Non-GAAP measure (1):
Corporate Operating Cash Flows436 334 31 
(1) Refer to Non-GAAP measures definitions and reconciliations from GAAP measures under the heading "Non-GAAP Financial Measures".

5
FINANCIAL STATEMENTS
TRINET GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
(in millions except per share data)2022202120222021
Professional service revenues
$189 $156 $565 $465 
Insurance service revenues
1,052 992 3,094 2,843 
Total revenues
1,241 1,148 3,659 3,308 
Insurance costs
872 851 2,547 2,400 
Cost of providing services
79 61 225 191 
Sales and marketing
72 56 179 147 
General and administrative
63 52 165 128 
Systems development and programming
18 12 54 36 
Depreciation and amortization of intangible assets
17 11 46 42 
Total costs and operating expenses
1,121 1,043 3,216 2,944 
Operating income
120 105 443 364 
Other income (expense):
Interest expense, bank fees and other
(22)(5)(33)(15)
Interest income
5 3 8 6 
Income before provision for income taxes
103 103 418 355 
Income taxes
26 26 111 86 
Net income
$77 $77 $307 $269 
Other comprehensive income/(loss), net of income taxes7 (2)(4)(3)
Comprehensive income
$84 $75 $303 $266 
Net income per share:
Basic
$1.23 $1.17 $4.85 $4.08 
Diluted
$1.22 $1.16 $4.81 $4.03 
Weighted average shares:
Basic
62 66 63 66 
Diluted
63 67 64 67 



 

 
 

6
FINANCIAL STATEMENTS
TRINET GROUP, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In millions)September 30, 2022December 31, 2021
Assets
Current assets: 
Cash and cash equivalents
$454 $612 
Investments
95 135 
Restricted cash, cash equivalents and investments
837 1,195 
Accounts receivable, net
9 15 
Unbilled revenue, net
363 324 
Prepaid expenses, net
63 67 
Other current assets
144 91 
Total current assets1,965 2,439 
Restricted cash, cash equivalents and investments, noncurrent
151 166 
Investments, noncurrent
142 168 
Property, equipment and software, net
90 79 
Operating lease right-of-use asset
38 42 
Goodwill
462 294 
Other intangible assets, net
103 6 
Other assets
128 115 
Total assets$3,079 $3,309 
Liabilities and stockholders’ equity 
Current liabilities: 
Accounts payable and other current liabilities
$122 $86 
Client deposits and other client liabilities
54 97 
Accrued wages
413 369 
Accrued health insurance costs, net
165 174 
Accrued workers' compensation costs, net
55 55 
Payroll tax liabilities and other payroll withholdings
677 929 
Operating lease liabilities
15 11 
Insurance premiums and other payables
20 18 
Total current liabilities1,521 1,739 
Long-term debt, noncurrent
496 495 
Accrued workers' compensation costs, noncurrent, net
129 135 
Deferred taxes
29 11 
Operating lease liabilities, noncurrent
41 41 
Other non-current liabilities
7 7 
Total liabilities2,223 2,428 
Stockholders’ equity:
Preferred stock
— — 
Common stock and additional paid-in capital
878 808 
Retained earnings (Accumulated deficit) (17)74 
Accumulated other comprehensive loss(5)(1)
Total stockholders’ equity856 881 
Total liabilities and stockholders’ equity$3,079 $3,309 

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FINANCIAL STATEMENTS
TRINET GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
(in millions)20222021
Operating activities
Net income
$307 $269 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
72 63 
Amortization of ROU asset, lease modification and impairment15 10 
Stock based compensation46 37 
Deferred income taxes
1 $— 
Provision for doubtful accounts
1 — 
Loss from sales and impairments of investments18 — 
Loss from dispositions of assets3 — 
Other2 4 
Changes in operating assets and liabilities:
Accounts receivable, net
10 10 
Unbilled revenue, net(38)(59)
Other assets and prepaid expenses, net(83)(44)
Accounts payable and other liabilities5 16 
Client deposits and other client liabilities(43)$(14)
Accrued wages40 246 
Accrued health insurance costs, net(10)(10)
Accrued workers' compensation costs, net(5)(6)
Payroll taxes payable and other payroll withholdings(252)(528)
Operating lease liabilities(13)(10)
Net cash provided by (used in) operating activities76 $(16)
Investing activities
Purchases of marketable securities
(337)(348)
Proceeds from sale and maturity of marketable securities390 232 
Purchases of property and equipment(39)(29)
Acquisition of subsidiaries, net of cash acquired(219)— 
Net cash used in investing activities
(205)(145)
Financing activities
Repurchase of common stock
(383)(94)
Proceeds from issuance of common stock
6 6 
Awards effectively repurchased for required employee withholding taxes
(15)(13)
Payment of long-term financing fees and debt issuance costs— (9)
Proceeds from issuance of 2029 Notes— 500 
Repayment of debt
— (370)
Net cash provided by (used in) financing activities(392)20 
Net decrease in cash and cash equivalents, unrestricted and restricted(521)(141)
Cash and cash equivalents, unrestricted and restricted:
Beginning of period
$1,738 $1,643 
End of period
$1,217 $1,502 
Supplemental disclosures of cash flow information
Interest paid
$18 $11 
Income taxes (refund) paid, net$60 $83 

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FINANCIAL STATEMENTS
Non-GAAP Financial Measures
In addition to the selected financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), we monitor other non-GAAP financial measures that we use to manage our business, to make planning decisions, to allocate resources and to use as performance measures in our executive compensation plan. These key financial measures provide an additional view of our operational performance over the long term and provide information that we use to maintain and grow our business.
The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation from, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.
Non-GAAP MeasureDefinitionHow 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, such as transaction and integration costs, and non-cash charges, such as depreciation and amortization, 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 prior periods 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 (2),
- 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-recurring costs and 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 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 benefit 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 25.5% for the third quarters of 2022 and 2021, which excludes the income tax impact from stock-based compensation, changes in uncertain tax positions, and nonrecurring benefits or expenses from federal legislative changes.
(2)    Non-cash interest expense represents amortization and write-off of our debt issuance costs and loss on a terminated derivative.

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FINANCIAL STATEMENTS
Reconciliation of GAAP to Non-GAAP Measures
The table below presents a reconciliation of net income to Adjusted EBITDA:
Three Months Ended September 30,Nine Months Ended
September 30,
(in millions)2022202120222021
Net income$77 $77 $307 $269 
Provision for income taxes26 26 111 86 
Stock based compensation16 13 46 37 
Interest expense, bank fees and other (1)
22 5 33 15 
Depreciation and amortization of intangible assets17 11 46 42 
Amortization of cloud computing arrangements1 — 3 — 
Transaction and integration costs14 — 31 — 
Adjusted EBITDA$173 $132 $577 $449 
Adjusted EBITDA Margin14.0 %11.5 %15.7 %13.6 %
(1)    Interest expense, bank fees and other includes $17M of realized investments losses on sales and impairments related to AFS securities.
The table below presents a reconciliation of net income to Adjusted Net Income and Adjusted Net Income per share - diluted:
Three Months Ended September 30,Nine Months Ended
September 30,
(in millions, except per share data)2022202120222021
Net income $77 $77 $307 $269 
Effective income tax rate adjustment— — 4 (4)
Stock based compensation16 13 46 37 
Amortization of intangible assets5 1 13 11 
Non-cash interest expense1 — 1 3 
Transaction and integration costs14 — 31 — 
Income tax impact of pre-tax adjustments(9)(4)(24)(14)
Adjusted Net Income$104 $87 $378 $302 
GAAP weighted average shares of common stock - diluted63 67 64 67 
Adjusted Net Income per share - diluted$1.64 $1.31 $5.94 $4.51 
The table below presents a reconciliation of net cash provided by (used in) operating activities to Corporate Operating Cash flows:
Nine Months Ended
September 30,
(in millions)20222021
Net cash provided by (used in) operating activities$76 $(16)
  Less: Change in WSE related other current assets(101)(50)
  Less: Change in WSE related liabilities(259)(300)
Net cash provided by (used in) operating activities - WSE$(360)$(350)
Net cash provided by operating activities - Corporate$436 $334 

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FINANCIAL STATEMENTS
Reconciliation of GAAP to Non-GAAP Measures for the fourth quarter and full-year 2022 guidance.
Low and high percentages represent increases (decreases) from the same period in the previous year and excludes transaction and integration cost percentages as there is no comparative amount in the fourth quarter and full year of 2021, respectively, and no percentages can be provided. Adjusted Net Income excludes transaction and integration costs for 2022.
The table below presents a reconciliation of net income to Adjusted Net Income and Adjusted Net Income per share - diluted:
Q4 2021Q4 2022 GuidanceFY 2021Year 2022 Guidance
(in millions, except per share data)ActualLowHighActualLowHigh
Net income $69 (143)%(93)%$338 (18)%(8)%
Effective income tax rate adjustment(6)(160)(100)(10)(182)(152)
Stock based compensation13 39 39 50 29 29 
Amortization of intangible assets1 426 426 12 55 55 
Non-cash interest expense— — — 3 (61)(61)
Income tax impact of pre-tax adjustments(3)159 159 (17)97 97 
Adjusted Net Income$74 (99)%(57)%$376 1 %9 %
GAAP weighted average shares of common stock - diluted67 67 
Adjusted Net Income per share - diluted$1.13 $— $0.50 $5.64 $5.90 $6.40 

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