Andrew Polkowitz

Andrew Polkowitz asked for an update on the Administrative Services Organization (ASO) offering, noting better-than-expected interest, and inquired if there's a different competitive set for ASO or if it's primarily converting existing HRIS clients. He also asked about the range of outcomes embedded in the 2025 guidance, specifically regarding factors that could push revenue, EPS, and ICR to the higher or lower end of the range.

Answer

Mike Simonds (CEO) reported that ASO conversions from SaaS-only clients exceeded expectations, and organic new sales are also encouraging. He described the ASO competitive set as a Venn diagram, overlapping with PEO competitors but also succeeding against a more fragmented local ASO market. Kelly Tuminelli (CFO) stated that TriNet is not expecting anything unusual in Q4, pointing towards the top end of the EPS range, partly aided by capital management. She identified ICR fluctuations as the largest potential swing factor for EPS.

Andrew Polkowitz asked for context on the Q4 to Q1 WSE decline, seeking to understand the split between normal seasonal churn and excess attrition from repricing. He also inquired about the go-to-market plans for the second half, specifically the relative importance of scaling the broker channel versus maturing the sales force.

Answer

President and CEO Michael Simonds stated that while retention remains favorable, about one percentage point of attrition was related to healthcare repricing. He noted that the bulk of annual attrition occurs in Q1. On the go-to-market strategy, Mr. Simonds emphasized that both scaling the broker channel (currently 10-15% of new business) and increasing sales force tenure are critical and will contribute to growth, with new broker initiatives expected to be additive in the second half.

Andrew Polkowitz inquired about TriNet's commitment to its long-term 87%-90% Insurance Cost Ratio (ICR) target, the potential trade-off with WSE growth, and investments in multichannel sales distribution.

Answer

CEO Mike Simonds explained that the October 1 renewals achieved targeted double-digit price increases with strong retention, suggesting the trade-off is manageable. He noted that while existing client retention is strong, new business conversion rates are seeing some pressure. Simonds also highlighted the hiring of a new Chief Revenue Officer to enhance sales productivity and expand the employee benefits broker channel.

Andrew Polkowitz of J.P. Morgan asked about Salesforce hiring plans in light of comments about sufficient capacity. He also requested more color on the composition of the late-stage deal pipeline, specifically regarding client size and the mix of new logos versus upsells.

Answer

CEO Dave Guilmette clarified that hiring is focused on adding specialized domain expertise for areas like navigation and AI, not general sales capacity, and noted a search is underway for a new Chief Commercial Officer. He described the late-stage pipeline as being heavily weighted toward upselling existing Fortune 500 clients with sizable opportunities in leaves, navigation, retiree health, and financial advisory solutions.

Andrew Polkowitz from JPMorgan Chase & Co. asked for more color on customer conversations regarding agentic AI and for a breakdown of hiring plans between sales and implementation teams.

Answer

CEO Dushyant Sharma described the AI opportunity as being in its early days but noted Paymentus is well-positioned due to its scalable platform and pay-per-use model, viewing AI as a potential future revenue driver. On hiring, he stated that while they are investing across the board, the primary focus is on sales to convert the strong pipeline into bookings, without providing a specific allocation.

Andrew Polkowitz of J.P. Morgan asked about the range of healthcare cost trend outcomes embedded in the Q3 and full-year 2025 guidance and requested more color on the renegotiations with UnitedHealth, including historical outcomes and key levers.

Answer

James Allison, EVP & CFO, explained that the company focuses on the annual trend, which was raised by 75-100 basis points, rather than specific quarterly fluctuations. Paul Sarvadi, Chairman & CEO, added that the adjustment reflects the higher-than-expected costs from Q2. Regarding UnitedHealth, Mr. Sarvadi described the relationship's evolution from a client to a strategic channel partner with aligned incentives for growth and cost management. Mr. Allison reinforced this, highlighting their shared participant-centric approach as beneficial for all parties.

Andrew Polkowitz asked about the net hiring assumption embedded in the 2025 outlook, how the current uncertainty compares to past cycles, and sought more detail on leveraging the Workday partnership in discussions with UnitedHealthcare.

Answer

Executive Paul Sarvadi clarified that the 2025 forecast assumes only a nominal level of net client hiring. He compared the current environment to past periods where the company had to factor in a new, higher cost trend, adopting a conservative stance to ensure a strong position for 2026. He further explained that the Workday partnership can be leveraged with UnitedHealthcare to offer a uniquely comprehensive solution for the underserved mid-market, addressing complex client needs like self-funded plans.

Andrew Polkowitz inquired about the benefits plan mix from the fall campaign, asking if there was any adverse selection. He also asked for details on net hiring trends across different client sizes and industry verticals during the fourth quarter.

Answer

CEO Paul Sarvadi responded that the trend of new clients selecting plans with more cost-sharing continued, which is seen as a normal market adjustment rather than adverse selection. He explained that weak hiring in Q4 was broad-based across client sizes and that Insperity's white-collar client base was in industries that saw less growth nationally. However, he noted a significant post-election improvement in business owner mindset and optimism.

Andrew Polkowitz asked about the structural drivers behind the strong business performance adviser (BPA) leverage, which saw 8% booked sales growth on only 2% BPA growth. He also requested details on the process for identifying the initial group of clients who will migrate to the new joint Workday solution.

Answer

CEO Paul Sarvadi attributed the strong Q3 sales performance to focused hard work in a hesitant economic environment, combined with the successful testing and refinement of incentive-based sales approaches. He expressed confidence for the fall campaign due to a strong mid-market pipeline and trained BPAs. Regarding the Workday migration, Sarvadi confirmed a formal process is underway, where they have identified a target list of mid-market clients and are in active communication with a smaller, initial beta group.