Good day, welcome to the TriNet Q4 2022 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Alex Bauer, Head of Investor Relations. Please go ahead, sir. Thank you, operator. Good afternoon. My name is Alex Bauer, and I am TriNet's Head of Investor Relations. Thank you for joining us, and welcome to TriNet's 2022 Q4 conference call. I am joined today by our CEO, Burton M. Goldfield, and our CFO, Kelly Tuminelli. Before we begin, I would like to address our use of forward-looking statements and non-GAAP financial measures. Please note that today's discussion will include our 2023 Q1 and full year financial outlook and other statements that are not historical in nature, are predictive in nature, or depend upon or refer to future events or conditions, such as our expectations, estimates, predictions, strategies, beliefs, or other statements that might be considered forward-looking. These forward-looking statements are based on management's current expectations and assumptions and are inherently subject to risks, uncertainties, and changes in circumstances that are difficult to predict and that may cause actual results to differ materially from statements being made today or in the future. Except as may be required by law, we do not undertake to update any of these statements in light of new information, future events, or otherwise. We encourage you to review our most recent public filings with the SEC, including our 10-K and 10-Q filings for a more detailed discussion of the risks, uncertainties, and changes in circumstances that may affect our future results or the market price of our stock. In addition, our discussion today will include non-GAAP financial measures, including our forward-looking guidance for adjusted net income per diluted share. For reconciliations of our non-GAAP financial measures to our GAAP financial results, please see our earnings release, 10-Q filings or 10-K filing, which are available on our website or through the SEC website. With that, I will turn the call over to Burton. Burton. Thank you, Alex. TriNet's strong Q4 and full year financial performance was driven by our differentiated solutions and vertical market focus. Our opportunity remains attractive despite near-term challenges for U.S. businesses. The SMB market remains under-penetrated by PEOs. TriNet sees fewer than half of our new opportunities in direct competition with other PEOs. The PEO model is attractive for SMBs as it provides scale to complex business problems using a variable cost model. This model also navigates a constantly changing legal and regulatory environment, including diverging federal, state, and local regulations. In TriNet's target market, remote workforces are prevalent. Hiring and managing these remote workforces represent a significant challenge for our customers. TriNet focuses on the right business where our unique value is core to our customers' success. In an industry that is trending towards undifferentiated offerings, TriNet stands alone with our vertical strategy. Our market-leading scale and strong capital structure enabled us to complete 2 important acquisitions. These acquisitions had a significant impact on the acceleration of our digital transformation and diversification of our product offerings. In addition to investing in these acquisitions, we aggressively return capital to shareholders. We believe our stock represents significant value, especially when measured against the long-term opportunity for TriNet. Turning to our financial performance, professional service revenues grew 9% year-over-year in Q4, and for the full year, professional service revenues grew 18% year-over-year. In Q4, total revenues were flat year-over-year and in line with the top end of guidance. When you add back the impact from our industry-leading 2022 credit program, total revenues would have grown by 4% in Q4. For the full year, total revenues grew 8% year-over-year to $4.9 billion, the largest total revenue achievement in our history. While we acknowledge our challenge with respect to volume in 2022, total revenues and professional service revenues grew well in excess of our average WSE count. The significant revenue growth occurred even after accounting for inorganic revenue. Our outperformance is directly attributable to our vertical strategy and customer selection process. Our focus on total lifetime value of a customer has driven us to build products and services appreciated by our core verticals. These include technology, financial services, and life sciences. The variables that impact total lifetime value include client growth rateImportance of choice in high-quality medical benefits, adoption of the full suite of capabilities, including both our service and advanced technology, all of which lead to a longer tenure with TriNet. Our core verticals have historically delivered a value in excess of 10 times that of a non-core client. We believe that our approach is sustainable, unique, and will continue to deliver profitable growth over time. In fact, the next great company is being created today, where TriNet has the opportunity to support their growth and enable their people. In Q4, we are pleased with our GAAP earnings per share of $0.78 and our adjusted net income per share of $1.11, both outperforming our guidance. In 2022, GAAP earnings per share came in at $5.61, and adjusted net income per share came in at $7.07. We once again generated strong cash flow from operations during the year. This enabled TriNet to deploy over $700 million in 2022 against our capital priorities without issuing additional debt. Looking forward, based on TriNet's current valuation and long-term outlook, share repurchase remains a priority. Dependent on market conditions, in 2023, we intend to deploy an additional $500 million towards our repurchase program. Our capital deployment and this increase to our repurchase program underscores the repeatability, predictability, and cash generative outcome of our business model. TriNet finished the quarter with approximately 349,000 WSEs in our PEO, down 4% year-over-year. TriNet's WSE count is driven by three factors: new clients and their WSEs coming to TriNet, retention of existing clients and WSEs, and net hiring by our clients in the install base. Beginning with new clients, we experienced significantly improved sales productivity on a per-rep basis by optimizing processes throughout the year. However, in the aggregate, we were unable to take full advantage of our new client opportunity in 2022 due to lack of sales capacity. Looking to 2023, in spite of the current economic conditions, I am optimistic we will accelerate new sales and the related WSEs in our core verticals well in excess of the past few years. This will be accomplished through a concerted effort and investment in additional sales capacity, incremental marketing contribution, and continued results from the newly implemented scalable processes. Notably, TriNet experienced dramatic growth in new sales in January. We grew new ACV and WSEs by 35% year-over-year, driven by our improved execution. This result is a key indicator of sales performance in 2023 because January is the ideal time to switch medical plans and restart W-2s. Sales hiring is underway to achieve continued growth. Strong sales leadership is in place throughout the U.S. Marketing's impact on January sales was also notable with strong lead generation, enhanced brand recognition, and advanced propensity to buy instrumentation utilized to yield impressive results. Turning to retention, which is the second factor contributing to WSE volume, our retention in 2022 was lower than the historic average. The shifting macroeconomic environment over the last several years contributed to this outcome. Our customers stayed longer and added employees quicker, which led to twice the number of large customers in our book versus our historic average. Ultimately, as we articulated in Q1 of last year, we saw a number of these large customers leave partially due to M&A activity. As I stated previously, this large company attrition trend has abated, and average customer size has normalized. As I look to 2023, I am very confident that our customer retention will increase and return to our historical experience or better. My belief is informed by a significantly increased retention rate in January. Additionally, we made investments in our customer experience function throughout 2022. I expect these investments to contribute to both higher retention and referrals going forward. I want to thank our service team for focusing on the KPIs and consistently exceeding aggressive average speed to answer and first call resolution metrics during 2022. An early result of this enhanced customer service is reflected in our NPS score, where we have seen a significant improvement. We fundamentally believe that in the SMB HCM industry, it is imperative to provide high quality customer service along with an industry leading technology experience. This is an and not an or. Net hiring by our clients, which we refer to as change in existing or CIE, is the third factor contributing to WSE volume. Because of our industry unique exposure to the most dynamic SMBs, net hiring by our customers is an important driver of volume. TriNet's customer selection only indirectly influences CIE outcome. In 2022, net hiring by clients was a tale of two halves. In the first half, hiring continued at record pace, consistent with that of what we experienced in the second half of 2020 and throughout 2021. The hiring we saw during this period was stronger than in prior years. In the second half, as interest rates increased and the economy slowed, hiring cooled dramatically, especially in Q4, where we saw flat net hiring across our installed base. In fact, we saw hiring cool further in January 2023. Our 2023 guidance reflects what we believe to be a very conservative assumption for hiring. This assumption at the low end would reflect a 10-year low hiring rate by our installed base other than 2020, which was due to the pandemic. In stark contrast to our low end guidance, we surveyed our customers regarding their 2023 hiring plans. We found a surprising amount of optimism, especially from customers with 100 or fewer employees. These customers, which represent about two-thirds of our volume, expect to grow their employee count in 2023 on average 10%. We are watching this data carefully. As the next few months evolve, our customer base will inform us about this resiliency. To close out the WSE discussion, during 2023, we expect to grow new business significantly. We expect to improve retention to normalized or better levels. We have a conservative assumption for hiring in our installed base, which reflects the uncertain economic environment. We understand the challenging economic environment we face in 2023. As we look to 2024 and beyond, it is our belief that we should be growing WSEs at high single to low double digit rates. With respect to M&A in 2022, we made two important acquisitions, Zenefits and Clarus R&D, which accelerate both our digital transformation and product expansion. We believe that a PEO must own its own technology, platform, software, and product development to take advantage of the true potential in this industry. TriNet Zenefits technology is exceeding our expectations and validates our thesis that this is an accelerator of our digital transformation. In the short time since the Zenefits acquisition, we delivered a fully integrated broker benefits solution. This fills an important product gap between an HRIS software solution and a full PEO. TriNet's offering in this area is unmatched for the subset of customers where the PEO combined with brokered benefits fits. The future of TriNet is a cloud-based company offering HRIS and PEO side by side. A dynamic TriNet customer will seamlessly move between exceptional HRIS software and the industry leading PEO as their complexity and growth dictates. An additional exciting acquisition we completed in 2022 is Clarus R&D. Clarus offers R&D tax credit services for SMBs. Clarus further expands our product and service offering for both HRIS and PEO clients. We see a significant opportunity to create value for our large cohort of eligible customers with a Clarus product. These are exciting times for the PEO industry. I believe there will be long-term growth due to strong secular tailwinds such as regulatory complexity, access to healthcare, and remote work. We view TriNet's stock price through the lens of these secular tailwinds as well as innovation and operational improvements TriNet has made in 2022. We believe that TriNet's stock offers tremendous long-term value. We acted on that view by repurchasing over $500 million of TriNet stock in 2022. Should our stock continue to offer similar value in the coming year, we have another $500 million available to us to deploy. With that, I will pass the call to Kelly for her review of our financials and guidance. Kelly? Thank you, Burton. TriNet once again delivered strong financial results during Q4 while navigating an increasingly uncertain economic environment. Our industry-unique vertical strategy has resulted in a dynamic and valuable customer base, which demonstrated in 2022 is not immune to broader economic forces. During the first half of 2022, the economy was robust, and our customer base continued to hire at record pace. We also experienced higher attrition during 2022 as several large companies left, partly driven by late cycle M&A. As the second half unfolded, the economy slowed, first impacting dynamic industries such as technology. With our concentration here, we saw this slowing during Q4 when our customer hiring slowed to slightly negative. Taken in aggregate, while pleased with our financial performance, we ended 2022 with lower volumes than forecast. As Burton discussed, for 2023, we are optimistic that our customer retention will normalize, and we believe we can accelerate new business growth and are seeing positive signs in these areas in January despite the tougher economic conditions. We are committed to delivering financial returns and deploying capital in an efficient and effective manner that our shareholders have come to expect from us, even as we support our new business growth initiatives, product and technology development, and continued improvements in our customer service experience. Let's review our financials. During Q4, total revenues were flat year-over-year in line with the top end of our guidance range. For the full year, we grew total revenues by 8%, also in line with the top end of our guidance. The performance in total revenues for Q4 and the full year was driven by growth in rate as we had continued high benefit participation by our WSEs. We also saw continued growth from mix as we added customers in our white-collared verticals, and our customers bought more of our products and services. Finally, TriNet Zenefits contributed roughly one point of growth for Q4 and full year. In Q4, as discussed on our October earnings call, we contributed $50 million to our 2022 credit program, which lowered total revenue growth by four points. That brings our total contribution of $75 million to our credit programs for the full year and lowered total revenue growth by just over one point. Professional service revenue in the quarter grew 9% year-over-year in line with our guidance. For the full year, professional service revenue grew by 18% in line with the top end of guidance. This growth in professional service revenue for the full year was driven by a few factors. First, HRIS revenue contributed 7% to year-over-year growth. Second, rate contributed 6%. Third, mix contributed 2% to growth as more of our customers purchased more of our services, and we saw continued shifts to our white-collared verticals. Average WSE volume for the year contributed approximately 2% to growth. For Q4, our insurance cost ratio was approximately 88%, lower than our forecasted range for the quarter of 93%-97%. For the full year, our insurance cost ratio was approximately 84%, also lower than our latest guidance range for the year of 85%-86%. The lower insurance cost ratio for the quarter and year was largely driven by lower overall health utilization than forecast, as well as a mix shift by our customers to lower cost regions. Workers' compensation contributed to the lower insurance cost ratio in the quarter and year as both claim frequency and severity remained subdued, along with some favorable prior period development. Both the health and workers' comp trends have benefited from the remote work trend. Regarding operating expenses in the quarter, the year-over-year growth of 25% was substantially driven by our acquisition of Zenefits midway through Q1 of 2022. We will begin to lap those expenses in Q2 of 2023 and have integrated most functions at this time. When we purchased Zenefits, we knew it would not be accretive in the first few years. We understood that there would be sizable integration and acquisition costs incurred in 2022, some of which will continue into 2023. As Burton mentioned earlier, we've been pleased with the technology and the capabilities it will bring as we fill in the product suite between our HRIS and our PEO solutions. One other notable expense item during Q4 was a $12 million charge for remaining lease obligations for office space we have vacated. Moving on to earnings per share. Q4 net income per diluted share exceeded the top end of our guidance by $0.71-$0.78, down 24% year-over-year. Q4 earnings outperformance versus our guidance was driven by lower than forecast insurance costs along with some minor expense favorability. The decline versus prior year reflects expenses, including acquisition and integration expenses incurred due to the acquisition of Zenefits. This brought full year GAAP net income per diluted share to $5.61, up 11% versus 2021. Q4 adjusted net income per diluted share also exceeded guidance by $0.61 to $1.11, down 2% year-over-year. This brought full year adjusted net income per share to $7.07, up 25% versus 2021, outperforming the top end of guidance by $0.67. During Q4, we repurchased $139 million worth of stock, including $109 million on a targeted $250 million tender offer. While the tender was undersubscribed, I was pleased at investors' confidence in our longer term stock price. This brought our total repurchase to $519 million for the year, comprised of two tender offers as well as open market purchases. Our capital priorities have not changed, and we will continue to invest for growth. We have confidence in our business and believe at our current share price our stock provides significant value. Given the board share repurchase reauthorization that Burton just mentioned, if it remains similarly undervalued, we intend to repurchase up to $500 million in 2023, subject to market conditions. Now let's turn to our 2023 Q1 and full year outlook, where I will provide both GAAP and non-GAAP guidance. In Q1 of 2023, we expect total revenue growth to be in the range of 1%-2% year-over-year, and professional service revenue growth to be in the range of 4%-6% year-over-year. Our revenue growth guidance remains muted and reflects our expectation that Q4 trend we saw in customer hiring or CIE will persist into the first half of 2023. In Q1, we are planning for healthcare utilization to return closer to our priced for historical experience. This will result in an insurance cost ratio of between 83%-86.5%, reflecting our seasonally higher ratios at the beginning of each year. This brings our estimate of Q1 GAAP net income per diluted share to be in the range of $1.33 to $1.82 per share, and Q1 adjusted net income per diluted share to be in the range of $1.70 to $2.20 per share. Regarding our full year 2023 guidance, we are forecasting our year-over-year total revenue to be in a range of down 2% to up 2%, with our professional service revenue expected to grow between 1% and 5% year-over-year. We expect our insurance cost ratios to follow seasonal patterns and reflect historical utilization rates with favorable cost ratios in Q1 and Q2 as members work through deductibles. We expect a return to higher insurance cost ratios in Q3 and Q4 as deductibles are exhausted, as well as when pooling limits reset in October. With this trend, we expect our full year insurance cost ratio to be in the range of 87.5%-89%. This insurance cost ratio projection is about three to five points higher than our 2022 result, reflecting healthcare utilization returning to a range closer to our expected pricing, higher utilization levels, and higher provider costs given the inflationary environment. We will watch this closely throughout 2023 to assess any refinements needed as we determine quarterly pricing changes. As a rule of thumb, every one point movement in our 2023 expected ICR will translate into approximately $0.50 in adjusted EPS given our slightly lower share count since 2022. Regarding our expectation around operating expenses, our expected remaining costs associated with the integration and acquisition of Zenefits and Clarus R&D include a number of time-based compensation awards, technology integration, and rebranding, amongst other things. We anticipate the remaining 2023 acquisition and integration costs to be $25 million-$30 million, with none extending beyond 2023. Given these anticipated trends, we expect full year GAAP net income per diluted share to be in the range of $3.30-$4.08 per share, and adjusted net income per diluted share to be in the range of $4.85-$5.65 per share. Our guidance includes share repurchases to offset normal dilution arising from stock compensation. Our guidance does not include any other intended repurchases under our current authorization due to the variability of repurchase timing and price. With that, I will return the call to Burton for his closing remarks. Burton? Thank you, Kelly. I am pleased with TriNet's 2022 financial and operating performance, especially in light of the challenging economic backdrop for much of 2022. We believe we will grow new business meaningfully year-over-year in 2023. We will keep our customers longer by supporting them in the ways that they require in this new business environment. I want to thank the entire TriNet team, but specifically call out our sales force for an exceptional performance in January 2023. TriNet's future is a cloud-based company offering HRIS and PEO side by side. A technology-enabled business services company unlike any other in our industry. We will further differentiate ourselves by offering the SMBs in our target verticals an industry-leading user experience coupled with an efficient service offering and access to the finest benefits. With that, I look forward to your questions. Operator? Thank you. We will now begin the question and answer session. To ask a question, you may press star one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star two. At this time, we'll pause momentarily to assemble our roster. The first question will come from Tien-Tsin Huang with JPMorgan. Please go ahead. Thank you. Good afternoon. Hey, Burton. Thanks for going through all the information including January month as well. That was really good to hear. I want to ask just as we're thinking about the fiscal 2023 year here, you're looking for 1%-5% professional services revenue growth. Can you maybe share some of the assumptions behind that? Maybe across rate, volume, mix, that kind of thing, and how it might be different versus 2022. I know there's a lot of moving pieces, but just trying to bring it back up to the high level at the PS level. Great. Tien-Tsin, it's Kelly. I'll be happy to take that. When I think about the assumptions we have underlying there, you know, we're really pleased with January sales. When I'm thinking about volume overall, pleased with sales. We think attrition is going to do better than it did in the prior year. The wild card there is really CIE. That's really the driver of volume. We do expect to get modest single-digit rate increases, and we will have six weeks more of benefits in the year for 2023, and have a full year of Clarus R&D, which we closed on September 1st. Those are some of the major things that, you know, kind of breaking it between the volume and rate. Hopefully, that helps. It is. Thank you for that. Just my quick follow-up then. I know the new sales and the retention improving, both of you sound quite confident that... I'm curious if we can think about just the cost to get there. Are you doing anything different in terms of investing and the dollar cost of getting retention up and picking up the new sales? It sounds like it's working so far in January. Just trying to understand the cost to get there. Thank you. Yeah, I mean, one of the. Actually, Burton, you want to start? I'll start, Tingen. To break it down, well, there's a couple things going on. First, there's a secular trend towards the PEOs moving from fixed costs to variable costs. I'm hearing that our prospects like our transparency. I've talked for a couple of quarters about the marketing efforts, and they are driving significant incremental business, and that's in terms of more leads, qualified leads, and it's becoming a real advantage. The third thing is, and you kind of hit on it, which is that we have invested in customer service, so referrals are up year-over-year, and they close at a very high rate. Finally, the execution on a per rep basis is up. I'll invest in new reps to continue or hopefully continue the same trend throughout the year. Yes. Tien-Tsin, the thing I would add to that is we talked a lot in earlier in the year in 2022 about what we invested in our sales process to improve the sales productivity. Now it's time to really make sure we've got the capacity to be able to take advantage of those. We're going to fund it through efficiencies within the company. Expenses will grow in a single digit rate, we will fund it through other expenses and really focus on growth. Perfect. No, it'll be fun to track the performance. Thank you, guys. Thank you both. Thank you. The next question will come from Jared Levine with Cowen. Please go ahead. Thank you. In terms of the demand environment, have you seen any change in the pace of prospective client decision-making, whether within the PEO or Zenefits business since you last reported? Thanks for the question. I'll take that two different directions. We're speaking to our customers on a regular basis as well as our prospects. You know, at the end of the day, they are struggling in the current economy. They do see a real advantage to the PEO model, where the variable cost model works much better than a fixed cost model in an uncertain environment. We have not seen a delay in the decision process from a qualified lead first meeting to the close, and our close rates right now are up. What I can tell you is, since we're doing a lot more enrichment upfront, meaning understanding the propensity to buy? Is it because we're targeting the right prospects that close? Is it the efficiency of the sales organization or a change in the economic environment with business? Great. Interest income was up pretty notably in 4Q. Can you shed some light on your interest income expectations that were embedded within that fiscal 23 revenue guide or excuse me, EPS guide? Happy to do that, Jared. We are, you know, we did reposition part of our portfolio in Q3. You saw us taking a little bit of capital losses during Q3. We're taking advantage and really what we're assuming is interest rates stay at about the level that they're at right now, in our short-term portfolio. If I could sneak in one more real quickly. On Zenefits- Sure. What are you assuming for revenue contribution for 2023, and how should its margin for FY 2023 compare to what you experienced in 2022 here? On Zenefits, the contribution's roughly $50 million is the expected revenue contribution from Zenefits for 2023. Up, you know, single-digit level from this year. In terms of margin, you know, we hadn't anticipated Zenefits to be accretive in the second year of owning them, but we are improving that. We've almost finished all the integration activities. We will be spending between $25 million-$30 million for both Zenefits and Clarus R&D in acquisition and integration costs, including branding and a few other... We have some retention plans that'll run out throughout the year as well. Great. Thank you. Thank you. Again, if you have a question, please press star then one. Our next question will come from Andrew Nicholas with William Blair. Please go ahead. Hey, Andrew. Good afternoon. Hi. Hey, Burton. First question, I just wanted to dive in a little bit to the first analyst question on kind of what's embedded in professional services guidance. Burton, you kind of broke down the drivers of volume growth. It seems like across all three of those factors there's room for improvement or some conservatism. I'm trying to get a sense for how much of that improvement is baked into the guide. Are you kind of extrapolating some of the improvements that you saw in new sales and in retention rates in January? Is that kind of the top end of the guide? Just trying to figure out how much of this is baked in versus not. No, it's a great question. Let me start, and I'll turn it over to Kelly. A significant amount of the new business comes in Q1 because of new W-2s, restarting medical plans, et cetera. The trend of Q1 really determines the year. Some of my excitement or bullishness about the new sales is because of the performance in January. You're correct there. Also, the largest single month of attrition, which impacts retention obviously, is January one because the converse happens. If somebody is gonna start a new plan with a new company, they leave at the end of the year. With retention up in January, with new sales significantly up in January, that's sort of where I am comfortable with the overall guidance at both ends. Honestly, the biggest variable is the change in existing. There really is a tale of two worlds there. When I talk to my customers, when I send them surveys, they still expect to grow significantly in 2023. This is not what I'm seeing. From my vantage point, the variability in the guidance is based on CIE mainly. I'll turn it to Kelly. Yeah. I'll just build on what Burton said, Andrew. When I think about the CIE component, the top end of our guidance really includes a couple points lower than our ten-year historical average. Looking at the last 10 years, even if I took, you know, both 2020 and 2021, which were extraordinary in either way on CIE, one was extraordinarily low, one was extraordinarily high, we're forecasting at the top end a few points lower than that historical average. At the bottom end, we're forecasting positive CIE, really at about half of what our historical average has been. That's really helpful. Thank you. Maybe a couple more. I hate to spend too much time on guidance, but I do wanna talk about the ICR a little bit more. I mean, the last couple of years, you started at a much higher level, or I guess lower spread, depending on how you look at that metric. Just curious what gives you more conviction at the outset of the year that you can be a little bit more profitable in that business in 2023 relative to kind of your starting point in the last handful of years? Yeah. It really when I think about the insurance cost ratio, you know, we do continue to price it to risk. We watch trends as we come, you know, as we're leaning into the year. We've seen favorability on our workers' comp book just given the trend to remote work. Regarding health, there is still a level of uncertainty associated with it, given providers renegotiating price, nurse costs, et cetera, et cetera. You know, we're comfortable with the range, just given the fact that we set pricing, you know, many months in advance as we're evaluating those trends, and we'll continue to watch it. We've seen utilization come up, absolutely. It just didn't come up as much in 2022 as we had changed pricing. We're really trying to refine that and give our clients the best offering possible, but making sure that we're covering it. You know, it's our best view at this point in time. Great. Thank you. Then if I could just ask 1 more. I wanted to go back to Burton, in your prepared remarks, you talked about an inability to take advantage of the opportunity because of a lack of sales capacity. I'm just kind of wondering, you know, how would you describe kind of getting to that point? Is it higher than expected attrition within your own sales force? Or was it maybe not anticipating as much explosive growth in your end markets as maybe you've seen over the past couple of years? Just trying to figure out what got to that point and maybe, you know, what your conviction is on the ability to turn that around. Thank you. Good question. Look, again, there's a secular trend towards PEOs. The opportunity is strong. We've talked about the unpenetrated market. I talked about that. What we were really looking for last year was to get to a level of sales productivity that we could continue to invest in net new salespeople that could be successful. Now, there's a lot of things that go into that. Part of it is the ability to generate qualified leads, brand recognition, penetration by vertical, leadership in sales in the field, ability to quote properly up front, and probably five other things that I'm not mentioning. By the end of the year, it became clear that sales productivity was at a level that if January was successful, we could start to turn on the spigot for net new reps and believe that we had a model which would provide them with a strong territory and opportunity. By the way, this is not going outside of our core verticals. I am not now going into business I didn't want before. This is our core verticals, geographic penetration, good leadership, and hopefully a repeatable model. As we hire reps and are able to keep an acceptable level of productivity, we will continue the hiring throughout 2023. Thank you again. No, thank you. If you have a question, please press star then one. Our next question will come from David Grossman with Stifel. Please go ahead. Thank you. Good afternoon. Hey, David. Hi. I think you said this during the prepared remarks, and I may have missed it, but what is the rate contribution to 2023 growth versus what you experienced in 2022? And that can include mix also, just kind of curious. Yeah. I don't think I did say it in my prepared remarks. Actually, I don't have that at my fingertips right here, David. Really when I think about the rate is low single-digit improvement year-over-year. Mix, you know, I think mix is about even, you know, we were pleased with the mix that we saw in 2022, you know, with strength in our strong verticals. Volume is a smaller contributor. I'm sorry, what was that on volume, Kelly? It was a smaller contributor just given the fact we are starting off at a lower base. Right. Just on volume, you know, I think Burton, if I heard you right, you said after this year, you're hoping to grow, you know, units or WSEs high single digits or low double digits. If I heard that right, you know, I don't recall the company ever really exceeding mid-single digit growth in WSEs. You know, I hear what you're saying about the sales force and productivity, but is that enough alone to really kind of achieve that kind of turnaround? David, it's a great question. I am proud of our strong revenue and profit growth, particularly over the last five years, consistently. I hear the focus on growing profitable WSEs. I am going to build that sales force to take advantage of the market opportunity to grow WSEs as the years go at a higher rate. The message is clear. From my standpoint, I'm not going to sacrifice our revenue and profit growth, and I've been pretty resolved in that over the last five years. The message I'm trying to give you is I'm going to build that capacity so that the WSE growth occurs in these out years. If the sales productivity is at the levels, I think if I heard you right, you know, you feel comfortable that you kind of achieved what you set out in 2022, which to get those sales productivity levels at a point where you could hire. Even with the down or flat to down economy, should we expect you to be adding, you know, materially to the sales headcount in 2023? David, let me take that 'cause I view that kind of as an expense question. We do plan on adding quota-carrying sales reps at the front office to increase the capacity. You know, we did invest a lot in productivity, that investment has to pay off this year. We're gonna fund it through, you know, efficiency elsewhere. We're really putting all of our energies in making sure we're growing profitable WSEs. That's really where we're rotating this year. We're trying to make sure that everyone's leaning in, and we're gonna be able to grow our business. Right. just one last question. Sure ... to get it on the set, because I think this has kinda come up over the years at different points in time. You know, I believe it, you know, it's hard to compare, you know, your model to some of the other Tier 1 providers because you're an at-risk, you know, provider, if you will, of health insurance. You know, how do you guys look at that internally or at the board level, you know, when people are comparing your unit growth rate, you know, to your Tier 1 peers, given that you are at risk, which has different implications in terms of how much unit volume you can take on at any point in time? I would say my board is consistent with my position, David, that strong revenue growth and profit growth is the long-term focus of the company. Consistently executing and meeting and beating the plan on a regular basis has been the focus. I am not gonna sacrifice that for WSE growth, but I will be taking WSE growth to the forefront as we execute the plan over the next couple of years. Yeah. I guess, you know, what I'm asking, Burton, though, is that just, you know, if you just look at the business model, it's different. If it is different, shouldn't, you know? The focus, to your point, is on margin, which, you know, you've definitely demonstrated that you can operate this at-risk model the last several years. I think with that, you know, you're not as free, though, to drive unit volume growth because of that. The question was more, is there any kind of rule of thumb or anything you want us to take away in terms of, you know, kind of what your unit growth should be relative to those Tier 1 peers, given the differences in the model? I'm not comparing myself to anybody else. I'm gonna answer it two ways. Hopefully, this will help. One is, I have a vertical strategy. The markets I'm in are not penetrated significantly, and I don't see that as a limiter to my growth. That's sort of number one. Number two is we have invested heavily in the go-to-market strategy, whether it be marketing or the back office transformation. As Kelly said, one of the outcomes in January was all the work that we did last year, and by the way, the investment we made last year. Right. Right. Can you give us, given the importance of January, can you give us any, you know, concrete metrics on, you know, what it looked like in terms of win rates, retention, whatever the key metrics that you're looking at? As I said, the year-over-year WSE and ACV annual contract growth was 35%. As you know, Q1 is about 40% of the year's new ACV, so that's where the question around the confidence in the year comes from. The win rates were up, the at bats were significant, and the focus on not only our core verticals, David, but the in-target accounts within those core verticals was significant. The overall size of the customer was good, right in the range that I like. Overall, it was pretty strong across the company. That's if you look at a geography, East Coast and West Coast. Okay. Got it. All right, great. Thanks very much. Good luck. Hey, you're very welcome. Thanks. This concludes our question and answer session, as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.