Thank you, everybody, for joining us. You know, I appreciate you being here. My name is Ryan Fenske at B of A Securities. I'm thrilled to host TriNet Group again this year at our conference, and up here on stage with me, I've got Kelly Tuminelli, Executive Vice President and CFO. Kelly, thank you so much for joining us. Ryan, great to be here with you. You know, to kick us off, could you provide a quick overview of TriNet for anyone less familiar with the story? Sure, sure. I'd love to. TriNet is, you know, what we do is we provide a suite of HR services to SMBs. Most of our roughly $5 billion worth of revenue comes through our Professional Employment Organization model, our PEO model. There's such a need for help on the part of our customers that it is a large market opportunity. What we've done and what we've seen is, with the proliferation of HR technology out there, our customers really appreciate kind of the service model that we provide and the service aspect of our model. Great. And then, you know, maybe to, you know, think about just kind of the overall economic backdrop, you know, you guys have a really interesting vantage point, you know, into the health of the, you know, SMB economy. You know, what are you seeing across, you know, your key verticals in terms of employment trends and hiring, you know, as we approach the end of the year? Yeah. You know, we get that question a lot, Ryan. TriNet's, you know, one thing for people that may be less familiar with the story is we've been around for over 30 years, and we've seen a number of different economic cycles. You know, complexity is our friend, and it really isn't abating. You know, the current cycle has seen, though, employment growth really outside our verticals. So you've seen it in government. You've seen it in healthcare, large company employment in areas that really has passed up the verticals that we serve. But I do think it's making our value proposition resonate even more strongly because it will become a virtuous cycle as rates normalize or at least stabilize and people get back to investing. Okay, great. And, you know, have you seen any early indications, you know, from your customers on, you know, what hiring plans are looking like for 2025? Well, you know, I think our clients tend to be an optimistic bunch. You know, they started SMBs for a reason, you know, and so they're always optimistic about the opportunity in front of them. That being said, we really haven't seen hiring start yet, particularly in the tech sector. It's a little bit too early for us to really call it, but I do think that the uncertainty with an election in front of people, as well as just the uncertainty around the rate environment, was keeping people from investing in growth. We are seeing that loosen up a little bit, and we're hopeful. But, you know, we're just hoping that with the election uncertainty behind us, that our clients will get back to hiring. Okay, great. And, you know, shifting gears a little bit, you know, what are some of the, you know, broader secular tailwinds for the, you know, the PEO industry that investors should be thinking about? Yeah. Well, historically, complexity has been our friend. We've seen a proliferation of state regulations, you know, and federal regulations for that matter. The new administration does seem focused a little bit more on deregulation, but in actuality, I really don't think HR and employment regulation is going to decrease over time. You know, it's funny to say this because in the short term, health cost inflation can be a headwind, but really in the long run, it's a tailwind for us and our business. And the reason it's a tailwind is people are looking for solutions because for a small and medium-sized business, if you want to provide good quality benefits to your employees, it costs a lot of money. You're looking for solutions to be able to do that in a way that's going to resonate with your employees, but also provide a lot of value to them while it's not costing you as much. I think TriNet can really help provide those types of solutions. Okay, great. And PEO's clearly, you know, a very underpenetrated market. You know, I think you've talked about, you know, just 7% of small and medium-sized business employees, you know, currently fall under a PEO. I guess, you know, given the value that you add for your customers, you know, why do you think penetration is still so low? You know, I think one of the things is industry awareness. Now, for one, there's a certain type of business that's just not the right business for a PEO in the SMB market. If you don't have a level of complexity, let's say a sole proprietorship or, you know, something that is a little easier to manage within one geography, et cetera, you probably don't need as much of a package solution like you would get with a PEO. For companies where they do have more complexity, that, you know, they don't want to invest in a full HR staff co-employment model, you know, providing HR, health, workers' compensation, training, compliance is a really good thing for them. I think overall, you know, there's an opportunity that competition actually creates an opportunity with awareness. We will be focused on a few targeted markets, but it is still relatively concentrated in the same six or seven states. Okay, great. You know, and then a little over a year ago, you know, you launched a new broker channel. I guess to start there, you know, why might a broker that was, you know, independently selling health insurance to an SMB prior, you know, want to partner with TriNet? For segment broker customers, we are a great fit. You know, we target small and medium-sized businesses, and we can actually provide scale to those brokers to manage their SMBs. We provide a comprehensive solution for SMBs that solves their customers' problems. It really offloads a lot of the broker customer service expense that they have because we're scaled to do that. For us, for the right brokers and right broker partners, it can be really a symbiotic relationship. Okay, great. And, you know, we talked about the roughly 7% market penetration. I guess, how should we think about the opportunity for, you know, a growing broker channel to expand that over time? Yeah, I think it can be helpful. I think we have, not only do we have an education opportunity with small and medium-sized businesses, but we do have an education opportunity with the right broker partners. You know, a broker channel gives us the scale we need from a go-to-market perspective, but it also can give us access to new geographies where we haven't historically had a big direct sales force presence. You know, the challenge brokers have sometimes is being able to provide technology in an efficient manner. And because we've got our proprietary technology, our benefits administration tool, we can actually provide PEO best-in-class service experience, which then allows a broker to be able to help serve a client in another way through their P&C lines, et cetera. Okay, great. And, you know, and then in terms of, you know, your direct sales to customers, you know, you've also made sizable investments in growing the sales force over the past year and a half. I guess, are there specific verticals or geographies that you've been, you know, particularly focused on there? Yeah. Well, you're right. We have, you know, we've made it very public that we were investing in our sales force because we did, we had let it shrink over time, and we really needed to build back up our sales force. But now really what the secret sauce is, is really keeping that sales force longer. You know, there are some specific targeted geographies where we're investing, but we really think it has to be targeted because really what you need to do is, you know, within an underpenetrated market, our best lead source is referrals. And so getting the name recognition out there, doing a good job with new customers, helping them be able to refer that to other customers, it's really that investment in those targeted markets that gets us the name and brand recognition, and then it becomes a self-fulfilling prophecy there. But sales force retention is absolutely key because as a sales rep hits their two, three, four-year marks, the productivity increases pretty substantially, and we want to be able to recoup that investment that we've made in our sales force. And the more tenured we can get them, the more effective they can be. So those are some of the things. Okay. Thanks for the color there. You know, and taking a step back, you know, it'd be great to run through the competitive landscape. You know, how has the environment changed, say, you know, over the past few years? Yeah, well, fundamentally, you know, I don't think there has been a significant change, at least in the competitive landscape for PEO competitors. There's always new competitors coming into the market. The largest players are still the largest players. But there has been a proliferation of HR technology and technology solution providers out there, and that's the way we need to see our model. We need to see our model as not just a PEO, but really providing HR solutions to our customers. Our customers generally prefer the simplicity of like a bundled solution that's wrapped in excellent service. I think every PEO competitor out there maybe takes a little bit different approach. And, you know, you may have heard the term before, you know, one PEO, which just really says that, you know, depending on an individual customer's needs, our solution hits a different set of customers than maybe some of our other competitor PEOs out there. But the thing that we think makes us maybe a little bit different than some is owning our own technology, and it will give us significant advantages in terms of both client and worksite employee experience. Okay, great, and so I think, you know, kind of leads into my next question on, I guess, you know, how have you framed the key differentiators between, you know, TriNet and, you know, competitor offerings? You mentioned the technology piece. You know, anything else you'd highlight there? Yeah, technology is a big part of it, but, you know, the other, another thing that makes us a little bit different is really our vertical approach to our marketplace. So we believe that, you know, our vertical approach, we can actually hit unique needs that different verticals have, and I think we can bring a level of expertise that's different than others. Okay, great. I guess then, you know, maybe shifting to, you know, insurance and some, you know, thoughts on, you know, how health costs have been trending. You know, I guess, you know, on insurance, you have a rather unique model where you guys take risk on roughly 80% of your insurance book. I think, you know, first, maybe can you walk us through the mechanics of that, you know, for anyone who's not familiar? And then, you know, second, you know, why TriNet, you know, prefers that model? Yeah, no, happy to, Ryan, well, you know, first, we do individually assess the risk of every group that we bring on to our TriNet PEO, and we price them individually based on overall demographics and risk characteristics. We take a deductible layer on a little over, as you mentioned, 80% of our health fees, where while we're offering fully insured plans, the individual takes really their individual deductible. TriNet then covers claims up to an individual pooling limit, which is $500,000 per life. Very few of our customers actually hit that, but, you know, that's why you have insurance. A cohort of our business does reprice quarterly, which is a little different than some competitors as well, but what that does is it enables us to be able to respond to trends as they're emerging. Because we actually do take risk, we're managing and maintaining a really detailed claims database. It helps us better assess, you know, our expected ongoing claims risk as well as see some of the underlying trends so we can make sure that our pricing includes that. At the end of the day, while it may be a short-term headwind when you see significant health cost inflation, we do think it's a long-term tailwind for our business. The reason for that is as it becomes a bigger part of, you know, an expense of a business, we can be there to help provide solutions. Okay, excellent, and you know, you mentioned, you know, kind of the near-term headwind from, you know, healthcare cost inflation. You know, obviously that's a challenge that has not been unique to TriNet this year. I guess, you know, from your vantage point, has that stabilized as we, you know, wrap up 2024? And you know, I guess as you guys reprice the January 1st cohort, you know, should that be an increase that's kind of consistent with what you pushed through on October 1st? Yeah, you know, it's a good question. And, you know, it is one of the benefits of being able to renew a cohort of our book every quarter is really taking that information in and then assessing what type of a rate increase is appropriate for each individual client. When I go back to our October 1st renewal, and that was low double-digit level, you know, the good news is we've had very strong retention of our clients. So what that tells me is that low double-digit renewal was about right, you know, in terms of it was appropriate for the cost trends that we're seeing and the competitive environment out there and that we're not priced at a level that's different than we're seeing from an emerging trend perspective. We are nearing the end of the renewal cycle for January. It is slightly higher than October. It's a little different mix of customers, but it's really a little early to call final retention on that at this point in time, but we don't have any reason to believe it won't be strong. One thing I mentioned on the third quarter call is part of our renewal strategy as well is we're not assuming that healthcare inflation is going to abate at this point in time. We just really haven't seen signs of that, and so our pricing does have to assume an elevated level of health cost inflation over time. Okay, great. Yeah, I appreciate the color there. Then, you know, you guys have also been, you know, doing some work this year around centralizing data and I think, you know, an overall increased level of investment in your data and analytics capabilities, you know, particularly with respect to how you manage risk. I guess, what signaled to the team that there was, you know, an opportunity to improve here? And, you know, what are some of the benefits that, you know, you expect to see over time? Yeah, well, in the area of data and analytics, I mean, think about the developments that have happened over the last few years with artificial intelligence, with just tools that you can use to more quickly assess and synthesize that. I'm going to start with the investment in insurance capabilities. So back in June, we announced Tim Nimmer was joining our company to lead our insurance services and operations, and he's been able to really strengthen our actuarial team and bring additional capabilities there. From a data and analytics centralization, previously we had had a lot of pockets of really good data and analytics across the company, but we felt like centralizing that, we could really invest in certain capabilities, enhance data science, and it wouldn't be diluted. We would be able to see, you know, from point of sale prospect information all the way through our colleague engagement survey scores and all the things that really impact a client experience and their propensity to stay with us. It's just an investment that we will continue to make as we look forward. Okay, great. And, you know, speaking of, you know, investing in the business, maybe we could shift gears a little bit to financial policy. You know, I guess, can you just walk us through how you think about capital allocation and what your relative priorities are today? Yeah, happy to, and as a CFO, that's like my favorite topic. You know, our capital priorities haven't changed. Last year, just to remind everyone, in 2023, we made our financial policy public, and we really have gone through and tried to make a concerted effort, so we were very transparent and clear with where we were prioritizing capital, but let me just reiterate, so first and foremost, our first priority is investing in our business for growth, so investing in profitable new business. With a new CEO, we have had an opportunity to review those priorities and really pull out the best ideas from a whole pool of good ones. We've zeroed in on a few that we're going to be investing in even further, and we'll be giving more information on that kind of in the February timeframe when we roll out our fourth quarter results and our guidance for 2025. As a part of the investment in organic growth, we are working on managing our expenses prudently because we are trying to create cost savings that can be repurposed for some of those strategic investments. Our next capital priority, you know, we talk about M&A. I'd put that in the opportunistic category at this point in time, but we will continue to return capital to shareholders. We initiated a dividend earlier this year, and you would expect to see us continuing to invest in buybacks and dividends as appropriate and in line with our capital policy. You know, lastly, I'd say we're planning on staying in the targeted leverage range that we laid out last year of 1.5x-2x Adjusted EBITDA and maintain an appropriate buffer, but while maintaining a prudent balance sheet. Okay, great. And just to clarify on the, you know, cost save opportunity that you mentioned, is that something you plan to discuss along with guidance during the next quarterly earnings report? Yeah, and it's something I think we've been highlighting on most of our earnings calls this year as well. You know, I think we've got the whole company focusing on a set of discrete priorities and, you know, making sure that we're really also focusing on enabling our colleagues to do their jobs efficiently and scale our service delivery in a way that makes a difference to our customers. Okay, great, and then, you know, on the M&A front, you know, could you give us some color on, you know, how that pipeline is looking today? Are there any, you know, opportunities that, you know, or specific priorities that, you know, you're focused on? Well, you know, what I would say on M&A is, you know, there's so many opportunities for organic growth right now that that's our number one priority. We will always be opportunistically looking at M&A for the right solutions that fit our offering. But again, with the lens of let's make sure it's absolutely the right opportunity that can help us grow the business and grow it and grow it profitably. Okay, got it. You know, and you mentioned, you know, the leverage range that you guys operate within. You've done an excellent job of maintaining a, you know, a conservative balance sheet and a conservative leverage profile. You're kind of, you're within that one and a half to two times range today. I guess, why do you think that range is the right level for this business, and you know, would you be comfortable, you know, temporarily going higher for the right transaction? Yeah, well, I just mentioned our M&A priorities, and right now we're really focused on organic growth. I think, you know, as you've probably read our ratings reports, if you look at our ratings reports, I think there is an acknowledgement that, hey, for the right strategic transaction, there is an opportunity to go above your target leverage range as long as you've got a path to pull it back within. You know, we're not contemplating that at this point in time, but it is something that gives us a little bit of flexibility to work it back into an appropriate range over time. But at the end of the day, we've got a really strong cash-generative business that allows us to be able to do that. Okay, great. And then just on, you know, kind of like the one and a half to two times range specifically, I guess, you know, why is that the level that you guys feel like is appropriate for, you know, for TriNet? Yeah, it's just, you know, historically we'd been very under-levered. We wanted to set some guardrails to make sure that investors understood, you know, what we were targeting, and it allows us to be comfortable throughout a number of different economic cycles. So I think it is the right level at this point in time. You know, and at the end of the day, we're working on building an enduring company. Okay, great. You know, and you mentioned, you know, some of the headwind that you guys have with the credit rating agencies, but I guess, you know, taking a step back, big picture, how do you think about your credit ratings? And, you know, over time, is there a desire to get to investment grade? Yeah, we'd always love to be investment grade because we like the cost of capital. But, you know, I'm very comfortable with the rating that we're at right now. And I think the way that we can improve that over time is growing profitably. I think it's really more of a scale question than it is a leverage targeted question. Okay, great. And, you know, before we, you know, wrap up and see if there's any other questions in the audience, you know, I know you can't talk about, you know, guidance for 2025 yet, but I guess, you know, as you guys look out to next year, you know, what are you most excited about in the business? Yeah, well, I'm excited that we've got a company that's all rowing in the same direction, focused on a discrete set of important priorities to help us grow and grow profitably. I'm excited about the market opportunity out there. I think with the election behind us, I think we've got an opportunity for people to, you know, think about, think back to growing their business, not the level of uncertainty that might be out there. You know, I'm excited to see, we're recovering in SMB hiring. Okay, excellent. Great. Any questions from the audience? So you talked a little bit about kind of like returning capital to shareholders. Is there anything on the debt side, you know, that you're planning in, you know, the coming year? I guess the leverage is already quite low, so there's probably no need for any LME, but just like, how do you think of kind of managing that interest expense, you know, that you're talking about, given that you are very lowly levered, you know, your coupon, I mean, your coupons are like in the 7% or so? Yeah, I mean, in terms of managing our debt, right now we have, you know, about $900 million in bonds and another $175 million borrowed on our credit line. We are working on maintaining that within our target leverage ratio. You know, we'll probably reduce the exposure on the credit line a little bit, and but right now we don't have imminent plans for an issuance.