All right, great. Welcome everyone in the room and on the webcast to the JP Morgan Ultimate Services Investor Conference. I'm Andrew Polkowitz on the Payments Processors and Services team. Very appreciative to have TriNet back at the conference. Of course, we have Mike Simonds, CEO, Kelly Tuminelli, CFO, and Alex Bauer from Investor Relations in the audience. Thank you for being here. To start off, Mike, I thought since you're not active, I don't know if we could quite call you the new CEO anymore, but it is your first year at the conference, so I thought I'd kind of ask you the why TriNet question. What made the role so attractive to you? And it opened up and if there's been any surprises in the first nine months? Yeah, no. Thanks again for having us. So I'm nine months into the role, so I think we're beginning to transition out of brand new. But yeah, I mean, I think the reasons for coming are pretty straightforward. I mean, one is just, I just look, having spent my career primarily in employee benefits and dealing in the SMB market, you see the problems that need to get solved. And I just think that the PEO business model is a fantastic one for a very large set of that SMB. And there's problems to overcome to really recognize that growth potential. And that kind of a challenge for me is pretty exciting, pretty fun. And then second is like, okay, but why TriNet within the space? And just again, having spent a lot of time in the market, the reputation at TriNet was one where sort of showing up customer first, doing the right thing, having a group of colleagues that are similarly minded around service to that SMB market. And funny enough, I guess what I'd say in terms of any surprises to the last part of your question, I knew by reputation I didn't get the depth that my colleagues are driven by helping SMBs. And it's so cool because you have 4,500 colleagues. I would venture to guess every one of them has a story about an entrepreneur and a role that TriNet played in helping them be successful. So that's been very cool to see. That's great to hear. And somewhat related to that. I was curious if you could share or detail any of your year one top investments or priorities that you've been focusing on and how it kind of sets up TriNet differently from say, the recent few years, how it positions you going forward? Yeah, well, I mean, like I said, it's a great business, so the good news is you come in and you've got an opportunity to sort of build on a really solid foundation. I would say in the first, yeah, first nine months it's been a few things. One thing, and Kelly was a big part of this. We realized that we actually had in pockets really good data. We didn't do as good a job of kind of seeing it from the front all the way to the back and being able to sort of get to common definitions and just the overall investment that we had in data and analytics. So one of the things we did early on was centralize and increase the investment and I think that's gonna play very big dividends for us over time as we think about where the growth opportunity is, how do we drive more efficiency and I think importantly how we manage risk. And on the topic of risk, one of the other things we did a few months later was break out the insurance services group, made that a team that reports directly into me. And we've started to bring in some real depth of talent, not just in terms of the expertise but in terms of the leadership because they in turn have been developing at every level. So I'm pretty excited about kind of centralizing data and then also the investments we've made to better understand risk, That's h elpful, and maybe staying on that topic of risk in the insurance side, I know, consistent with other industry players in the quarter, you guys called out elevated health cost trends. So I kind of had a two-part question because you did also mention that retention was really strong despite having to price up in the October renewal period. So I wanted to ask, number one, what's resonating keeping retention so high? And part two, if there's anything you could share on the January 1 renewal period to date. Yeah, why don't I take it, and Mike, if you have anything to add, that'd be great. Well, one, in terms of what's resonating, I think our service model is resonating. When we think about what our offering is to our SMBs, that's resonating. We mentioned on our call that we are going out with, you know, low double digit to mid double digit increases on our October 1 and our 1/1 renewals. And by the time we implement 1/1, we'll have about 2/3 of our book repriced at that point in time anticipating this elevated health care environment continuing. But retention has been really good. As we looked at our [term one], it's a little early to call 1/1 at this point in time, but TriNet's model is repricing every customer to risk. And we do a really good job consulting with our customers, helping them understand their utilization patterns, ways that they can be more efficient as they're moving forward in terms of their utilization of healthcare and the rest of our service model really resonates. But Mike, anything you have to add? I think you hit well. Okay, that's super helpful, and maybe staying. One more question on the topic of the insurance and your risk appetite. You guided for fourth quarter about a three-point range, I think, in the ICR. I was curious if you can kind of just walk us through the range of outcomes that brings you to the higher, lower end of that guidance range. Well, you know, as we went into the year we were really looking to, you know, we had had, call it, outsized returns from insurance. We had anticipated health care inflation to come a little bit earlier than it really did, and so we were trying to price to bring it back within our targeted range and health trends kind of outpace that a little bit, so what we saw as we've been going throughout the year is we have seen an increase in high cost claims. Our pooling limits reset on October 1st, and just to remind you the way our insurance construct works on about 80% of our book is we do take risk on that, and so the participant takes the first layer of risk through their deductibles and co-payments. We take the next layer of risk up to $500,000 per life. Those claims that have gone over $500,000 are up about 1/3 this year, so with that pooling reset on October 1 we just have a little bit wider band of uncertainty in the fourth quarter because we're newly on risk for some of those high cost claims. Understood, so a little bit of just the timing of the period. Yeah. Okay, great. Maybe changing gears a little bit. I think I asked the insurance questions maybe just on the health of the SMB economy from TriNet's vantage point. Obviously there's lots of data sets out there on SMB hiring, wages, things like that. But you guys have a unique perspective on certain verticals. So I was kind of curious if you could share what you're seeing as far as it relates to TriNet. Sure. So maybe just taking a quick step back to say we've at TriNet we focus in typically pretty high growth verticals. So technology is our largest, life sciences, financial services. And so if you took like a long run, what's the net hiring of our customer base in any given year it's going to run kind of high single- to low double digits. So that's kind of the norm. And in the last two years, we've been running basically at flat, you know, just under 1%. And so it's been a pretty unusual and pretty extended period. And, you know, unemployment is actually pretty favorable in the broader economy. But when you look at the jobs report and you go one click down into the verticals that we target, you know, you really haven't seen the job growth in those. And so we're sort of at the floor of what we've seen historically, maybe even a little bit below it. I think that bodes well as the economy turns in those sectors and as the investment environment and the lean towards growth in the SMB, as confidence comes back, that's a big potential uplift for us. All that being said, we just haven't seen it yet. So as we're sort of looking at the book and to your specific question, at this point, on a net hiring basis, we're encouraged to see sales still coming in. There's still entrepreneurs and startups that are happening out there in the lower end of our segment, say under 50 lives. We continue to see decent growth as they kind of edge toward the mid. I'd say they've rebalanced a bit over the last couple of years and they're managing margin as much as they are our growth. I feel pretty confident that that over time will revert, but we just haven't seen it yet. Okay, maybe taking a step then, outside of kind of the macro waiting game on SMBs, you have talked a lot about your distribution, so both direct and then indirect with the broker channel. So I just wanted to know if you could unpack the importance of each and maybe some investments that maybe are needed in each channel to kind of drive that next leg of growth? Yeah, so on the direct side, we've actually made a pretty sizable investment to grow our sales force over the last 18 months or so. And I'd say, you know, certainly we'll look in certain geographies for incremental growth on top of that. But in general, the bigger lever for us is driving productivity through that sales team. And the primary lever actually is retaining that sales team. So when you kind of look at the numbers, one of the interesting things you see is it's, you know, modest increases in production for a salesperson in their first 12 and 24 months. But at 36 months, it starts to get really interesting and sort of magic happens as you get to that fourth year. And it's not surprising when you think about it, because the PEO business model is such a good business model and it meets such a broad array of needs in an integrated way that no other approach in the SMB market I think can match. But it is a complex sale. You know, you're asking an SMB to change out all their benefits, to change their workers' compensation, to change their payroll provider, to change many of their HR practices and any technology they have in place, that's a big ask. A salesperson that's showing up in their first 12 months, 24 months, that's a tricky proposition. So as we sort of invest in who we're selecting, how we're developing them, the compensation, training and support systems, we feel like we can manage turnover to a really below historical average level and in doing so drive productivity of that existing team, which actually brings a benefit to the second channel, which is the employee benefits broker. And we could spend time on it if you want at some point. But in general the SMB market is one where about [you can take] under 100 lives. Employers about, call it 72%-73% offer healthcare today. Those are the kinds of customers we're going to target. Well over 90% of those customers get their benefits via a broker. And so the strategy that we're putting in place, the investments we're making in the processes, the service model and the technology integrations into a select number of high quality brokers gives us the opportunity to open that channel up. And having an experienced sales team in market building relationships with local brokerages with a service and a tech and a process that's designed around that channel, I think for us represents some pretty significant upside. Okay, that's great. Then maybe related to channel, a question I wanted to ask is maybe the balance of growth versus margin expansion. I know obviously that because you're a price-to-risk PEO, you have to be careful about the types of businesses you're willing to underwrite to some extent. So I'm curious if there's any differentiation in margin across the direct versus indirect channel. Maybe how that flows through your model as far as insurance underwriting risk, that type of thing. It's a great question. You know, we do. You know, I've talked to you before Andrew, about our client lifetime value models and we do look at profitability for all of those. You know, we have to take into account underwriting, we have to take into account the amount of time that a client's going to be on. You know, on TriNet, historically we've seen a little more churn with broker generated business. And so the revenue stream to the broker is more of a recurring revenue type model than on our direct sales force because we do see a little bit more turnover there. But we do try to price that so that we're pricing it appropriately. To Mike's point, on benefit brokers, you know, that's an area that I think we with the addition of Shea Treadway and Mike's experience within the broker community, you know, we can really unlock the partnerships there because they want their clients to have a good value. You know, with a solution like TriNet's that's relatively stable, sticky, I think we can make a significant difference. Okay, very clear. And then maybe one more related question on the WSE growth. I'm just curious how you benchmark growth. I know if you look at some of the NAPEO statistics, you kind of see high single digit industry growth over a long history. But I'm curious how you guys think about that understanding that you have specific verticals you target that are typically high growth. You want me to start? Yeah, please. I mean, I guess I'll turn that into how do we think of margin versus growth? You know, because I know a lot of our investors do care about that. You know, priority one for us is making sure we're good, disciplined underwriters and that we're going to bring on and grow profitably. You know, the biggest lever for us from a margin perspective, just because of the impact on the revenue base and is our insurance cost ratio. One point is $40 million-$50 million. So, you know, that does make a very big difference, and Mike talked about the investment in the insurance services organization and the talent there, and you know, I think that will help us differentiate within the marketplace. Secondly though, we're, you know, on the margin side, we're focusing on efficiencies, both for margin but also for cost competitiveness. You know, we know that we're not the only player out there. We know that price is one factor, it's not just the service model, and so we want to make sure we were remaining cost competitive in the market and being efficient in our operations, and then the third aspect would be skilled service delivery, taking all three of those together, you know, and with skilled service delivery, you know, making sure that we're really investing in the areas that are going to make a difference for our clients and that will help retention, so taking it all together, that plus our targeted verticals, we do think over the midterm we can get to mid- to high single-digit growth. Okay, that's great. And in your discussion, Kelly, you kind of led right into my next question. I was curious. You mentioned obviously there are other competitors out there, it's a competitive space. Are there any changes or anything noticeable different with the competitive environment, whether it's around price, new upstarts, just type of offerings, things like that? Yeah, great question. And so with all of nine months of experience, I don't have all the track record, but in general, as I spend time in market and with salespeople, it's definitely a competitive market. And in general, when you have a little bit muted growth in the customer and prospect base and a little bit more caution, and maybe some of that was leading up to the election and sort of understanding what was going to get to some level of certainty on the other side of it. The PEO sale is a complex sale, I would say. And so the quicker one is the churn. And taking a client from an existing PEO because that employer understands the model, they're going from one provider to a second provider versus multi vendor to one provider. So you're going to see a little bit more, I'd say, competitive pressure than normally. But in general, in terms of what matters, one of the great things, I just think this is such a great business model, but also you've got an underpenetrated market and you have very different strategies among competition. You know, you have very, you know, a couple of very scaled players that mostly draw or the majority draw of their PEO clients is up through their own installed base. And so it's an upsell motion and that's great. There's others that are much more focused kind of at the larger end of the SMB market, some that are a lot more just kind of pure tech with a little service on top of it. And so I think our approach of owning our own technology squarely focused on verticals in the SMBs that we're in. And this point about risk, which Kelly was talking about, I think it's a really important one, is the short term is the pain of healthcare cost inflation. And it takes us a little bit of time to reprice for that. We will do that. The midterm reality is that's a tailwind for our business. The average SMB, you know, does not have the tools, the resource, the access to deal with the health care cost growth and the complexity that's here to stay. And so they're going to be more drawn into a PEO model and a PEO model like ours, which is a little unique where we take risk and can curate options down to that SMB. You know, that's something that we're going to be smart about, but we're going to lean into. Okay, that's great, and you hit on a couple of things I wanted to ask about in that answer. Maybe I'll start towards the beginning of your answer. As far as you mentioned penetration, we always get that question from investors. How penetrated is the PEO market? What's the right TAM? I'm curious, maybe broad strokes, how do you categorize education of what a PEO is out in the SMB economy? Has it changed say in the last five, 10 years? Basically, how are you thinking about competitive takeaways from people that know the PEO industry well versus greenfield first time outsourcing type of SMBs? Yeah, I think in the general sense most of our wins are still coming from non-PEO customers, so we're replacing a multi-vendor solution. I would say we do have good competitors. I would say one thing that has changed over the last four, five, six years is we are more often competing with a PEO in winning that new PEO customer, so there's more familiarity with the model and enough to say, okay, well perhaps I should sort of see what two or three different providers have to offer. I think that's sort of the natural maturation of the industry and in general having some good scaled competitors, I think that's quite helpful to the industry and to TriNet because I do think our biggest barrier to growth and tapping into what is still a very underpenetrated market is just familiarity and comfort with the model itself. On balance I think it's actually a pretty good thing for us. Okay, that's interesting. And then maybe tapping into the other part of your answer to my question. Two questions ago, you mentioned that a lot of your competitors sort of have natural upsell motions. They're not, call it like pure play PEOs. You obviously acquired Zenefits now HRIS a couple of years ago. I'm curious how that fits in, if that becomes a potential upsell motion going forward. Yeah, well first kudos for listening to all parts of my answer. That's very few people will do that, so thanks. Nice job. Yeah, I mean I think if you think about the strategy for the Zenefits acquisition, number one, it's about technology and it gave us a modern, I'd say a leading benefits capability. And that's something we're going to come back to again and again is standing out in terms of how we deliver benefits. It brought talent that's made a real difference for us on a bunch of different dimensions. And then third, yeah, absolutely. It brought a SaaS HRIS business. I'd say what we're learning is where TriNet stands out. Where I think we have a right to win consistently is when you have really strong technology combined with really strong service delivery at the end of the day. So I look for us to continue to sort of double down on the technology, making sure that it's built to support our colleagues in a service delivery process over time. And you've seen that a little bit with the HRIS users has come down a bit as we've repriced up to a more intensive, higher price point and look for us to continue doing that over time. Okay, that's helpful. And then I guess the next question that I typically get on that part of the business, is it more of a, call it micro SMB tool to win share before they're ready for the PEO model or is it more of a graduation type of funnel on top of businesses that are maybe getting a little bit big for the outsourcing model? Yeah, I think the bigger opportunity is the ability to unbundle services as a client grows. And again, I think that's a TriNet thing. Not saying it's the only PEO but for us, because tech is our biggest vertical, because life sciences and we get a lot of startups, they grow pretty fast. Right. And so being able to keep, you know, get that CIE growth in the high single, low double digits is fantastic. And then as they start to outgrow portions of the PEO model, that's great. We should celebrate that. Unbundle parts of that offering, let them go into more of a mid market solution, but maintain a relationship for another two, three, four years. And so that ability to unbundle is another thing where we have some of those capabilities today to be direct, they're a little bit clunky. I think we can make that a much smoother process, and having your own proprietary technology designed around the service proposal, I think is a key unlock there. Okay, very clear. I have a handful more questions, but maybe now about eight minutes left. Is there anyone in the audience that would like to ask a question? We have one over here. Hi. So you talked a little bit about how your kind of part of the market is seeing, you know, less growth in employment versus kind of a broadly stable macro. Has that influenced kind of your interest in expanding to other verticals that are maybe less cyclically oriented? I kind of caveat all this because I don't get the impression that most of the PEO market is doing much better, but just curious how it kind of has influenced your thoughts about the verticals you're serving. Yeah, I mean, I think we spent some time over the summer refreshing the strategy. So we're going to constantly look at the industry verticals, the geographies that were concentrated. We were just talking about channel and how do we expand channel. I would say in terms of the vertical. The interesting thing on this most recent deep dive that we learned is really what matters the most is represented by the vertical, but it's one click down. That's most consequential to the business model and the fit with TriNet. And what we actually found was within some of the blue-gray collar industries, there are meaningful chunks where they show up with higher incomes, lower employee turnover, well, benefited employees. And those I think have the potential for us to be expansion opportunities. But doing that thoughtfully to make sure that we're understanding the workers' compensation risk that we take on as part of that project. They tend to have slightly different technology and process needs, but for us it's pretty exciting to think about. Hey, there's people that, there's SMBs out there in some other verticals that really see their people as their competitive advantage and show up accordingly. And the TriNet business model I think can be a fit for them as well. Any other questions in the audience? Okay, maybe I'll go to capital deployment priorities there. So you already talked about some of your investments, but beyond that, obviously there's the dividend potential, M&A buybacks. Just wanted to hear how you're rank ordering some of those things versus just organic investment in the business kind of now and into 2025. Great. No, happy to do that. I mean, I think we've got, we have a proven track record capital deployment. Last year we came out with our financial policy. We also have talked pretty regularly about our capital priorities. You know, as we're looking forward, especially with Mike joining as a CEO, you know, we have really looked at our business and said, hey, what are the few critical priorities we're going to focus on to win and we're going to be really disciplined in doing that and making sure that, you know, so as we're investing organically, making sure that we're not investing in things that aren't going to make a difference for our customers. When I think about, you know, what we've done from a capital allocation and buyback perspective, we bought over $1 billion worth of stock last year and we've continued to be active in the market. You'll continue to see us do that into 2025, you know, as appropriate, within our, the bounds of our financial policy. We also initiated a dividend, you know, as another form of capital return to our shareholders. So those are our focus right now. From a capital deployment perspective. We're always scanning the market for M&A, but it has to align with the strategy and the priorities that we have. Okay, that's great. And maybe kind of in line with that question around how you invest and you know, become efficiencies. I didn't ask any questions on AI. I figured I'd sneak that in in the last couple minutes. Is there anything you're excited about around the comm, whether it's revenue generating on the sales side or ways to become more efficient on the service delivery side? Yeah, I think we're quite excited. And just to give a little context, we have and will continue to significantly increase the investments we're making in technology broadly. We opened up a tech and innovation center in Hyderabad, India, and we're scaling that very rapidly. And it's been remarkable the access to talent and the alignment around values. And so I think the opportunity, if you think about the spectrum, the opportunity for us to just continue to invest in our colleagues, improve our processes, move more things to digital, frankly, is still an opportunity for us. And then when you layer on the opportunity to sort of take what is inherently a pretty complex regulatory landscape and a, from an HR policies and practice, there's a lot of complexity. You know, AI LLMs that are tied to decision making models, that has a lot of runway for our business. I think it will be a, it'll be a gradual versus an overnight, but I think it has the real opportunity to take a lot of the work we ask our colleagues to do today, which is frankly low value add, take that off their plate so that they can focus on what matters, which is, you know, building relationships and being consultative. Okay, that's, that's super helpful, and maybe going back to one of your answers earlier, you know, we talked about how same-store hiring is what it is right now compared to history. You also referred to getting past the election. I'm curious if there's anything you could talk about as far as what you've seen on sales cycles, call it over the last three, four or five, six months. I know we're only a week past the election, so I'd imagine you have nothing to update right now, but is there any uptick in, let's call it like client velocity that you think could happen over the, call it the next handful of quarters now that we're kind of past that hurdle? Yeah, I mean, I guess what I can speak to is like there's certainly been caution in the environment as we've kind of gotten to this point and I think it's natural and we were spending time looking back at the 2016 election and certainly we saw confidence or at least sort of an understanding of the landscape and a little more certainty and that was helpful to us in terms of our clients sort of willingness to hire, to think about vendor changes and things like that. So again, we're not going to be the ones to sort of pick it at this point, not having seen it in the data, but it represents upside and if you go back to Kelly's point, if you just think about TriNet as an investment, the big drivers for us, the CIE comes in very low acquisition, very low incremental service costs. That's running high single digits to low double under historical averages. Our insurance cost ratio is running towards the top end. We're in the process of repricing that back into the mid part of the range. I think we're doing some things that'll help us sort of meaningfully and predictably drive ACV or our new sales bookings growth over time. So in sum total, it feels like there's a lot of upside. When exactly the market turns, I can't predict. But I think we're doing the things that we can control to address it. That's great. We look forward to tracking it on our side. Now we only have about a minute left, so maybe we'll wrap up. I figured I'd ask you the question, why is TriNet a great investment today? What's underappreciated by investors? Yeah, underpenetrated market. The need for what we do is only growing. It's more complex from a regulatory point of view. You've got more distributed workforce. A 20-employee tech firm in San Francisco probably has employees in six states. You know, a financial services company here probably has folks in Denver and Chicago and San Francisco. So you're dealing with all that complexity. So there's tailwinds to the business model and I think for TriNet, and it's not for every investor, but we're going to compete in a unique way. You know, we're going to stay focused on the parts of the market that we feel like we've got tailored solutions for. We are going to take risk that can lead to some volatility. We think we can get paid for that risk, and we can also turn it into more flexibility into the offer that we bring into market. Okay, that's great and right on time at the buzzer, Mike, Kelly. This has been great. Thank you so much for being here. Good. Thank you. Thanks for having us. Yep. Thank you.