UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36373 TRINET GROUP, INC. (Exact Name of Registrant as Specified in its Charter) (State or other jurisdiction of incorporation or ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36373 TRINET GROUP, INC. (Exact Name of Registrant as Specified in its Charter) (State or other jurisdiction of incorporation or organization ...

[Part I - Financial Information](index=6&type=section&id=Part%20I%20-%20Financial%20Information) This section provides TriNet Group, Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the periods ended September 30, 2021 [Unaudited Condensed Consolidated Financial Statements](index=29&type=section&id=Part%20I%2C%20Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents TriNet Group, Inc.'s unaudited condensed consolidated financial statements as of September 30, 2021, and for the three and nine-month periods then ended, including detailed notes [Condensed Consolidated Financial Statements](index=29&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The core financial statements show **net income of $77 million** for Q3 2021 and **$269 million** for the nine months, with **total assets of $3.07 billion** and **stockholders' equity increasing to $809 million** Q3 & YTD 2021 Income Statement Highlights (in millions) | Metric | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Total revenues** | $1,148 | $3,308 | | **Operating income** | $105 | $364 | | **Net income** | $77 | $269 | | **Diluted EPS** | $1.16 | $4.03 | Balance Sheet Highlights (in millions) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $2,201 | $2,160 | | **Total assets** | $3,069 | $3,043 | | **Total liabilities** | $2,260 | $2,436 | | **Total stockholders' equity** | $809 | $607 | [Notes to Condensed Consolidated Financial Statements](index=33&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial statement line items, covering revenue recognition, restricted cash, investment portfolio, long-term debt, legal contingencies, and stock-based compensation - The company's Recovery Credit program, providing client discounts, was fully recognized as of June 30, 2021, with a total impact of **$145 million**, while a separate 2021 Credit Program resulted in a **$25 million accrual** in YTD 2021[129](index=129&type=chunk)[132](index=132&type=chunk) - As of September 30, 2021, the company held **$1.2 billion** in restricted cash, cash equivalents, and investments, primarily as collateral for workers' compensation and health benefits claims, and to prefund client payrolls[136](index=136&type=chunk)[138](index=138&type=chunk) - In February 2021, the company issued **$500 million** of 3.50% senior unsecured notes due 2029 to repay its 2018 Term Loan and concurrently entered into a new **$500 million** revolving credit facility[154](index=154&type=chunk)[156](index=156&type=chunk) - A class action lawsuit was filed against directors of certain TriNet subsidiaries regarding fiduciary obligations for retirement plans, which the company believes is without merit and cannot reasonably estimate any possible loss[161](index=161&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=6&type=section&id=Part%20I%2C%20Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The MD&A provides management's perspective on TriNet's financial performance, highlighting strong Q3 2021 revenue and income growth driven by increased Worksite Employees (WSEs) and effective cost management, along with liquidity and capital resources [Executive Summary](index=6&type=section&id=Executive%20Summary) TriNet reported strong Q3 2021 performance with significant year-over-year increases in revenues, operating income, and net income, driven by a record-high Total Worksite Employee (WSE) count and strategic operational achievements Q3 2021 Performance Highlights (vs. Q3 2020) | Metric | Value | % Change | | :--- | :--- | :--- | | Total revenues | $1.1B | +18% | | Operating income | $105M | +133% | | Net income | $77M | +133% | | Diluted EPS | $1.16 | +142% | | Average WSEs | 347,502 | +9% | YTD 2021 Performance Highlights (vs. YTD 2020) | Metric | Value | % Change | | :--- | :--- | :--- | | Total revenues | $3.3B | +11% | | Operating income | $364M | +8% | | Net income | $269M | +8% | | Diluted EPS | $4.03 | +10% | | Average WSEs | 333,839 | +3% | - Key operational achievements in the first nine months of 2021 include growing Total WSEs to a record high, establishing the 2021 Credit Program, introducing TriNet Financial Services Preferred, launching the 'Connect 360' service model, and completing a **$500 million** senior notes offering to refinance debt[22](index=22&type=chunk) [Results of Operations](index=8&type=section&id=Results%20of%20Operations) For Q3 2021, total revenues grew **18% to $1.15 billion**, driven by a **9% increase in Average WSEs** and reduced Recovery Credits, leading to a **133% surge in operating income to $105 million** and an **Insurance Cost Ratio (ICR) decrease to 86%** Financial Summary (in millions) | Metric | Q3 2021 | Q3 2020 | % Change | YTD 2021 | YTD 2020 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $1,148 | $975 | 18% | $3,308 | $2,971 | 11% | | **Insurance costs** | $851 | $759 | 12% | $2,400 | $2,137 | 12% | | **Operating expenses** | $192 | $171 | 12% | $544 | $496 | 10% | | **Operating income** | $105 | $45 | 133% | $364 | $338 | 8% | | **Net income** | $77 | $33 | 133% | $269 | $250 | 8% | - The growth in total revenues was primarily driven by higher Average WSEs, rate increases, and a significant year-over-year decrease in revenue reduction from the 2020 Recovery Credit program[52](index=52&type=chunk)[53](index=53&type=chunk) - Insurance costs rose due to increased medical services utilization in 2021 compared to suppressed levels in 2020 caused by the pandemic, combined with costs for COVID-19 testing, treatment, and vaccination[64](index=64&type=chunk)[65](index=65&type=chunk) - Operating expenses increased mainly due to higher sales and marketing costs, including the TriNet PeopleForce conference, increased payroll taxes, and higher compensation and consulting expenses to improve client experience and systems[58](index=58&type=chunk)[72](index=72&type=chunk)[74](index=74&type=chunk) [Non-GAAP Financial Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Income to evaluate performance, with **Adjusted EBITDA increasing 91% to $132 million** in Q3 2021 and **Adjusted Net Income growing 123% to $87 million** Reconciliation of Net Income to Adjusted EBITDA (in millions) | | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net income** | $77 | $33 | $269 | $250 | | **Adjusted EBITDA** | $132 | $69 | $449 | $413 | Reconciliation of Net Income to Adjusted Net Income (in millions) | | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net income** | $77 | $33 | $269 | $250 | | **Adjusted Net Income** | $87 | $39 | $302 | $274 | [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) TriNet maintains sufficient liquidity by managing corporate assets separately from WSE obligations, with **corporate working capital increasing to $645 million** and **$334 million in corporate operating cash flow** generated in the first nine months of 2021 Working Capital Breakdown (in millions) | | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Corporate Working Capital** | $645 | $290 | | **WSE Working Capital** | $0 | $0 | | **Total Working Capital** | $645 | $290 | - Corporate working capital increased by **$355 million** from year-end 2020, driven by a **$224 million increase in corporate cash** and a **$98 million increase in corporate investments**[84](index=84&type=chunk) YTD 2021 Cash Flow Summary (in millions) | Activity | Corporate | WSE | Total | | :--- | :--- | :--- | :--- | | **Operating activities** | $334 | $(350) | $(16) | | **Investing activities** | $(133) | $(12) | $(145) | | **Financing activities** | $20 | $0 | $20 | - In February 2021, the company issued **$500 million** in 3.50% Senior Notes due 2029, using the proceeds to repay its 2018 Term Loan and for general corporate purposes, and also entered a new **$500 million** revolving credit facility[99](index=99&type=chunk)[100](index=100&type=chunk) - During the first nine months of 2021, the company repurchased **1,155,707 shares** of its common stock for approximately **$94 million**, with **$264 million** remaining available for future repurchases as of September 30, 2021[98](index=98&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Part%20I%2C%20Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on its investment portfolio, which is managed by investing in liquid, investment-grade securities with short durations, and was not material as of September 30, 2021 - The primary market risk is interest rate risk on the company's investment portfolio, which consists of liquid, investment-grade securities[109](index=109&type=chunk)[110](index=110&type=chunk) - The company attempts to limit interest rate and credit risk by adhering to an investment policy that sets minimum requirements for credit quality, liquidity, and diversification[110](index=110&type=chunk) [Controls and Procedures](index=28&type=section&id=Part%20I%2C%20Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting identified during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[113](index=113&type=chunk) - No material changes to the internal control over financial reporting were identified during the third quarter of 2021[115](index=115&type=chunk) [Part II - Other Information](index=44&type=section&id=Part%20II%20-%20Other%20Information) This section provides additional information on legal proceedings, risk factors, and equity security sales and repurchases [Legal Proceedings](index=44&type=section&id=Part%20II%2C%20Item%201.%20Legal%20Proceedings) This section refers to Note 7 of the condensed consolidated financial statements for details on legal proceedings, including a class action lawsuit related to retirement plans that the company believes is without merit - Information regarding legal proceedings is detailed in Note 7 of the financial statements[178](index=178&type=chunk) - The primary legal matter discussed is a class action lawsuit filed in September 2020 concerning fiduciary obligations under ERISA for two retirement plans available to worksite employees[161](index=161&type=chunk) [Risk Factors](index=44&type=section&id=Part%20II%2C%20Item%201A.%20Risk%20Factors) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020, and its Form 10-Q for the quarter ended June 30, 2021 - There were no material changes in risk factors from those disclosed in the 2020 Form 10-K and the Q2 2021 Form 10-Q[177](index=177&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Part%20II%2C%20Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2021, TriNet repurchased approximately **$20 million** of its common stock as part of a board-authorized program, with **$264 million** remaining available for future repurchases as of September 30, 2021 Issuer Purchases of Equity Securities (Q3 2021) | Period | Total Shares Purchased | Weighted Avg. Price | Shares Purchased Under Plan | Remaining Authorization ($M) | | :--- | :--- | :--- | :--- | :--- | | July 2021 | 64,972 | $79.95 | 64,690 | $278 | | August 2021 | 212,630 | $87.88 | 165,766 | $264 | | September 2021 | 618 | $91.51 | — | $264 | | **Total** | **278,220** | | **230,456** | | - The company repurchased a total of approximately **$20 million** of its stock during the three months ended September 30, 2021[182](index=182&type=chunk) - As of September 30, 2021, approximately **$264 million** remained available for repurchase under the company's stock repurchase program, which has no expiration date[181](index=181&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36373 TRINET GROUP, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 95-3359658 (State or other jurisdiction o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Delaware 95-3359658 (I.R.S. Employer Identification No.) FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36373 TRINET GROUP, INC. (Exact Name of Registrant as Specified in its C ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36373 TRINET GROUP, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 95-3359658 (State or other jurisdiction of incorpora ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Delaware 95-3359658 (State or other jurisdiction of incorporation or organization) One Park Place, Suite 600 (Address of principal executive offices) (Zi ...

For the transition period from to UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 Commission File Number: 001-36373 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TRINET GROUP, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 95-3359658 (State or other jurisdiction of ...

[FORM 10-Q Filing Details](index=1&type=section&id=FORM%2010-Q%20Filing%20Details) This section details the filing information for TriNet Group, Inc.'s Quarterly Report on Form 10-Q for Q1 2020, including registrant specifics and filer status - The document is a Quarterly Report (Form 10-Q) filed by TriNet Group, Inc. for the quarterly period ended March 31, 2020[2](index=2&type=chunk)[3](index=3&type=chunk) Registrant Information | Detail | Value | | :--- | :--- | | **Registrant Name** | TRINET GROUP, INC. | | **State of Incorporation** | Delaware | | **Commission File Number** | 001-36373 | | **Trading Symbol** | TNET | | **Exchange** | New York Stock Exchange | | **Shares Outstanding (as of April 21, 2020)** | 67,290,388 | | **Filer Status** | Large accelerated filer | [Table of Contents](index=2&type=section&id=TABLE%20OF%20CONTENTS) This section provides a comprehensive list of all chapters and sections included in the Form 10-Q report, facilitating navigation [Glossary](index=3&type=section&id=Glossary) This section defines key acronyms and abbreviations used throughout the report, ensuring clarity and consistent understanding of financial and operational terms - The glossary provides definitions for acronyms and abbreviations used throughout the report, particularly in the Unaudited Condensed Consolidated Financial Statements and Management's Discussion and Analysis[10](index=10&type=chunk) [Forward-Looking Statements and Other Financial Information](index=4&type=section&id=FORWARD%20LOOKING%20STATEMENTS%20AND%20OTHER%20FINANCIAL%20INFORMATION) This section outlines forward-looking statements regarding TriNet's future expectations and the factors that could cause actual results to differ, along with the use of non-GAAP financial measures - The report contains forward-looking statements regarding TriNet's expectations, including the impact of the COVID-19 pandemic, customer base growth, technology improvements, operating efficiencies, and financial performance metrics[12](index=12&type=chunk) - Important factors that could cause actual results to differ materially from forward-looking statements are discussed in the 2019 Form 10-K and this Form 10-Q's 'Risk Factors' section, including risks related to COVID-19, co-employer liabilities, insurance costs, economic volatility, and regulatory changes[13](index=13&type=chunk) - The company uses non-GAAP financial measures to manage its business, make planning decisions, allocate resources, and as performance measures in executive compensation plans, with definitions and reconciliations provided in the MD&A section[17](index=17&type=chunk) [Risk Factors](index=6&type=section&id=Part%20II%2C%20Item%201A.%20Risk%20Factors) This section details significant risks, particularly those arising from the COVID-19 pandemic, affecting TriNet's operations, financial condition, and client base - The COVID-19 pandemic has caused unprecedented economic, health, and business disruption, which is impacting TriNet's business and could result in a material adverse effect on its financial condition and results of operations[20](index=20&type=chunk) - The pandemic is adversely affecting small and mid-size business clients, leading to headcount freezes, furloughs, terminations, business shutdowns, and liquidity issues, which could materially impact TriNet's revenues and margins[21](index=21&type=chunk)[22](index=22&type=chunk) - The spread of COVID-19 is causing higher volatility in group health insurance expenses due to changing medical cost trends, and potential new laws (e.g., in California and Illinois) could increase workers' compensation claims, materially affecting insurance costs[23](index=23&type=chunk) - New government laws and programs (e.g., Families First Coronavirus Relief Act, CARES Act) require significant resources for compliance and client assistance, and their unpredictable application to the PEO industry could negatively affect TriNet's products and services[24](index=24&type=chunk) - Remote work arrangements due to COVID-19 increase cybersecurity risks, and the diversion of management and service team attention, along with potential employee illness, could negatively impact service delivery[25](index=25&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=8&type=section&id=Part%20I%2C%20Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on TriNet's financial performance, condition, and operational results for the period, including the impact of the COVID-19 pandemic [Executive Summary](index=8&type=section&id=Executive%20Summary) TriNet, a leading HR solutions provider for SMBs, reported strong Q1 2020 financial performance with double-digit revenue and income growth, despite the onset of the COVID-19 pandemic. The company focused on customer experience, expense discipline, and managing insurance margins, while also responding to the pandemic's impact on clients and operations [Overview](index=8&type=section&id=Overview) This subsection describes TriNet's core business as a PEO, offering comprehensive HR solutions and industry-tailored products to small and midsize businesses - TriNet is a leading provider of HR expertise, payroll services, employee benefits, and employment risk mitigation services for small to midsize businesses (SMBs)[28](index=28&type=chunk) - The company offers a comprehensive suite of HR-related products and services, including compensation, benefits, payroll processing, health insurance, and workers' compensation, leveraging its technology platform and HR expertise[28](index=28&type=chunk) - TriNet employs a vertical approach, offering six industry-tailored products: TriNet Financial Services, Life Sciences, Main Street, Nonprofit, Professional Services, and Technology, to address specific HR needs in different client industries[29](index=29&type=chunk) [Operational Highlights](index=8&type=section&id=Operational%20Highlights) This subsection details TriNet's Q1 2020 operational focus on customer experience, efficiency, and its response to the COVID-19 pandemic, including remote work and client assistance - Consolidated results for Q1 2020 reflect growth, disciplined financial management, and a continued focus on customer service and brand awareness through the 'People Matter' marketing campaign[30](index=30&type=chunk) - The company is investing in process improvements to enhance customer experience, support retention, and improve operational efficiency and scale, a multi-year initiative started in 2018[31](index=31&type=chunk) - In response to the COVID-19 pandemic, TriNet implemented remote working and office closures in March 2020, while actively evaluating and responding to the pandemic's impact on its business and clients[31](index=31&type=chunk)[32](index=32&type=chunk) - Key actions taken in Q1 2020 include continued revenue growth, discretionary spending, maintaining net insurance margin, enhancing short-term cash reserves by drawing **$234 million** on its credit facility, and providing COVID-19 assistance programs to clients[32](index=32&type=chunk) [Performance Highlights](index=9&type=section&id=Performance%20Highlights) This subsection presents key financial and operational performance metrics for Q1 2020, highlighting revenue, income, and Worksite Employee growth Q1 2020 Financial Performance Highlights (YoY Change) | Metric | Q1 2020 (millions) | Q1 2019 (millions) | % Change | | :----------------------- | :------ | :------ | :------- | | Total revenues | $1,048 | $934 | 12% | | Operating income | $120 | $82 | 46% | | Net Service Revenue | $283 | $251 | 13% | | Net income | $91 | $63 | 44% | | Diluted EPS | $1.31 | $0.89 | 47% | | Adjusted Net income | $97 | $69 | 41% | Q1 2020 Worksite Employee (WSE) Metrics (YoY Change) | Metric | Q1 2020 | Q1 2019 | % Change | | :---------- | :------ | :------ | :------- | | Average WSEs | 336,348 | 311,433 | 8% | | Total WSEs | 336,846 | 317,779 | 6% | - Total revenues grew by **12%** and Net Service Revenue (NSR) grew by **13%** in Q1 2020, primarily driven by Average WSE growth. Net income increased **44%** and Adjusted Net Income increased **41%** due to continued expense discipline[34](index=34&type=chunk) [Key Financial Metrics](index=10&type=section&id=Key%20Financial%20Metrics) The company's Q1 2020 financial metrics show significant year-over-year growth across key income statement items, including total revenues, net income, and diluted EPS, alongside increases in non-GAAP measures like Net Service Revenues and Adjusted EBITDA. Balance sheet and cash flow data also reflect changes, notably a substantial increase in debt and changes in cash flow activities Income Statement Data (Three Months Ended March 31) | Metric | 2020 (millions) | 2019 (millions) | % Change | | :-------------------------- | :-------------- | :-------------- | :------- | | Total revenues | $1,048 | $934 | 12% | | Net income | $91 | $63 | 44% | | Diluted net income per share | $1.31 | $0.89 | 47% | | Net Service Revenues (Non-GAAP) | $283 | $251 | 13% | | Net Insurance Service Revenues (Non-GAAP) | $127 | $115 | 10% | | Adjusted EBITDA (Non-GAAP) | $145 | $108 | 34% | | Adjusted Net Income (Non-GAAP) | $97 | $69 | 41% | Balance Sheet Data (March 31, 2020 vs. December 31, 2019) | Metric | March 31, 2020 (millions) | Dec 31, 2019 (millions) | % Change | | :-------------------- | :------------------------ | :------------------------ | :------- | | Working capital | $284 | $228 | 25% | | Total assets | $2,765 | $2,748 | 1% | | Debt | $620 | $391 | 59% | | Total stockholders' equity | $533 | $475 | 12% | Cash Flow Data (Three Months Ended March 31) | Metric | 2020 (millions) | 2019 (millions) | % Change | | :---------------------------------- | :-------------- | :-------------- | :------- | | Net cash used in operating activities | $(282) | $(142) | 99% | | Net cash used in investing activities | $(94) | $(11) | 755% | | Net cash provided by (used in) financing activities | $185 | $(47) | (494)% | | Corporate operating cash flows (Non-GAAP) | $119 | $78 | 53% | [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes several non-GAAP financial measures, including Net Service Revenues, Net Insurance Service Revenues, Adjusted EBITDA, Adjusted Net Income, and Corporate Operating Cash Flows, to provide a clearer view of operational performance, aid in planning, resource allocation, and executive compensation. These measures are reconciled to their GAAP equivalents to enhance understanding of financial performance - Non-GAAP financial measures are used to manage the business, make planning decisions, allocate resources, and as performance measures in executive compensation plans, providing an additional view of operational performance[39](index=39&type=chunk) - Key non-GAAP measures include Net Service Revenues (total revenues less insurance costs), Net Insurance Service Revenues (insurance revenues less insurance costs), Adjusted EBITDA (net income excluding certain non-cash and non-operating items), Adjusted Net Income (net income excluding certain non-cash charges and tax effects), and Corporate Operating Cash Flows (operating cash flows excluding WSE-related assets and liabilities)[41](index=41&type=chunk)[43](index=43&type=chunk) Reconciliation of GAAP to Non-GAAP Measures (Three Months Ended March 31) | Metric | 2020 (millions) | 2019 (millions) | | :---------------------------------- | :-------------- | :-------------- | | Total revenues | $1,048 | $934 | | Less: Insurance costs | $765 | $683 | | **Net Service Revenues** | **$283** | **$251** | | Insurance service revenues | $892 | $798 | | Less: Insurance costs | $765 | $683 | | **Net Insurance Service Revenues** | **$127** | **$115** | | NIM | 14% | 14% | | Net income | $91 | $63 | | Provision for income taxes | $30 | $20 | | Stock based compensation | $9 | $9 | | Interest expense and bank fees | $4 | $5 | | Depreciation and amortization | $11 | $11 | | **Adjusted EBITDA** | **$145** | **$108** | | Adjusted EBITDA Margin | 51% | 43% | | Net cash used in operating activities | $(282) | $(142) | | Change in WSE related other current assets | $110 | $45 | | Change in WSE related liabilities | $291 | $175 | | **Corporate Operating Cash Flows** | **$119** | **$78** | [Results of Operations](index=15&type=section&id=Results%20of%20Operations) The company's Q1 2020 results show growth in WSEs and revenues, particularly in Technology and Professional Services verticals, driven by volume and pricing strategies. However, the COVID-19 pandemic is projected to cause a decrease in future revenue volume and rate increases, especially in Main Street and Professional Services verticals, due to client attrition and reduced hiring [Operating Metrics (Worksite Employees)](index=15&type=section&id=Operating%20Metrics) This subsection analyzes the growth and anticipated decline of Worksite Employees (WSEs) in Q1 2020, particularly due to the impact of the COVID-19 pandemic - Average Worksite Employees (WSEs) increased **8%** in Q1 2020 compared to Q1 2019, primarily driven by growth in Technology and Professional Services verticals due to reduced attrition and continued hiring in 2019[47](index=47&type=chunk) - Total WSEs decreased **1%** compared to December 2019 due to seasonal attrition, partially offset by new sales and growth in the installed base[48](index=48&type=chunk) - The company anticipates increased attrition and a reduction of WSEs across all verticals in coming quarters due to the COVID-19 pandemic, particularly within Main Street and Professional Services verticals[48](index=48&type=chunk) [Total Revenues](index=16&type=section&id=Total%20Revenues) This subsection details the 12% increase in total revenues for Q1 2020, driven by WSE growth and pricing, while anticipating future negative impacts from COVID-19 - Total revenues increased by **12%** in Q1 2020 compared to Q1 2019, primarily driven by WSE growth, especially in Technology and Professional Services verticals, and effective pricing strategies[37](index=37&type=chunk)[54](index=54&type=chunk) - Monthly total revenues per Average WSE increased **4%** during Q1 2020 compared to the same period in 2019[53](index=53&type=chunk) - The COVID-19 pandemic is expected to negatively impact revenue volume growth and the ability to achieve rate increases in subsequent quarters, leading to an anticipated decrease in Professional Service Revenues (PSR), Insurance Service Revenues (ISR), and total revenues[55](index=55&type=chunk) [Operating Income](index=17&type=section&id=Operating%20Income) This subsection explains the 46% increase in operating income for Q1 2020, attributed to higher revenues and disciplined expense management Operating Income Change (Q1 2019 to Q1 2020) | Factor | Impact (millions) | | :---------------------------------------------------------------------------------------------------------------- | :---------------- | | First Quarter 2019 Operating Income | $82 | | Higher total revenues (WSE growth, ISR fees) | +$114 | | Higher insurance costs (WSE growth) | -$82 | | Lower operating expenses (compensation-related) | +$6 | | **First Quarter 2020 Operating Income** | **$120** | - Operating income increased by **46%** to **$120 million** in Q1 2020, primarily due to higher total revenues driven by WSE growth and increased insurance service fees, partially offset by higher insurance costs, and further boosted by lower operating expenses[33](index=33&type=chunk)[58](index=58&type=chunk) [Professional Service Revenues (PSR)](index=17&type=section&id=Professional%20Service%20Revenues) This subsection describes the growth in Professional Service Revenues, reflecting WSE expansion and strategic pricing, and defines its components - Professional Service Revenues (PSR) increased in Q1 2020, reflecting WSE growth in Technology and Professional Services verticals, the company's vertical pricing strategy, and ongoing changes in WSE mix[60](index=60&type=chunk) - PSR represents fees charged for payroll processing, HR expertise, employment and benefit law compliance, and other HR-related services[52](index=52&type=chunk) - Clients are billed either on a per-WSE per month/transaction fee or as a percentage of WSEs' payroll, with fees fluctuating with payroll changes for the latter[59](index=59&type=chunk) [Insurance Service Revenues (ISR)](index=18&type=section&id=Insurance%20Service%20Revenues) This subsection details the growth in Insurance Service Revenues, driven by increased Average WSEs and higher per-participant fees, and defines its components - Insurance Service Revenues (ISR) grew in Q1 2020, primarily due to increases in Average WSEs and higher insurance service fees per plan participant[61](index=61&type=chunk) - ISR consists of insurance-related billings and administrative fees collected from clients and withheld from WSEs for workers' compensation and health benefit insurance plans provided by third-party carriers[52](index=52&type=chunk)[61](index=61&type=chunk) [Insurance Costs](index=19&type=section&id=Insurance%20Costs) This subsection analyzes the increase in insurance costs due to WSE growth and health costs, anticipating future COVID-19 related expenses and changes in medical utilization - Insurance costs increased in Q1 2020, primarily due to increases in Average WSEs and higher health costs per enrollee (medical cost trend)[63](index=63&type=chunk) - The company did not incur significant COVID-19 related insurance costs in Q1 2020 but expects to incur such costs for testing and treatment in subsequent quarters[64](index=64&type=chunk) - While medical services utilization was stable in Q1 2020, it is expected to decrease in subsequent quarters as enrollees defer or cancel non-essential procedures due to COVID-19 stay-at-home orders[65](index=65&type=chunk) [Net Service Revenues (NSR)](index=20&type=section&id=Net%20Service%20Revenues) This subsection highlights the 13% growth in Net Service Revenues and consistent Net Insurance Margin, emphasizing NSR's role as a key performance metric - Net Service Revenues (NSR) increased by **13%** in Q1 2020 compared to Q1 2019, reaching **$283 million**[37](index=37&type=chunk)[45](index=45&type=chunk) - Net Insurance Margin (NIM) remained consistent year-over-year at **14%** in Q1 2020[45](index=45&type=chunk)[68](index=68&type=chunk) - NSR is a key metric used to provide a comparable basis of revenues, allocate resources, and evaluate the effectiveness of business strategies[67](index=67&type=chunk) [Operating Expenses (OE)](index=21&type=section&id=Operating%20Expenses) This subsection details the 4% decrease in operating expenses, reflecting expense discipline, but anticipates future increases relative to declining revenues due to ongoing investments - Operating expenses decreased by **4%** in Q1 2020 compared to Q1 2019, primarily due to reductions in compensation-related expenses and professional fees in General and Administrative (G&A) and Systems Development and Programming (SD&P)[72](index=72&type=chunk)[75](index=75&type=chunk) - Operating expenses as a percentage of Net Service Revenues decreased to **58%** in Q1 2020 from **67%** in Q1 2019, reflecting expense discipline[70](index=70&type=chunk) - Compensation-related expenses for corporate employees represented **64%** of operating expenses in Q1 2020[71](index=71&type=chunk) - The ratio of operating expenses to total revenues is expected to increase in subsequent quarters as total revenues decrease and the company continues to invest in customer and WSE experience improvements[72](index=72&type=chunk) [Other Income (Expense)](index=22&type=section&id=Other%20Income%20(Expense)) This subsection explains the decrease in interest expense due to lower rates and debt balance, but projects future increases following a significant credit facility draw-down - Interest expense, bank fees, and other expenses decreased year-over-year in Q1 2020 due to a lower effective interest rate and a reduced remaining balance on long-term debt[77](index=77&type=chunk) - Interest income remained consistent year-over-year[77](index=77&type=chunk) - Interest expense is expected to increase in the future as a result of the **$234 million** draw-down on the revolving credit facility in March 2020, which was intended to enhance short-term cash reserves[77](index=77&type=chunk) [Provision for Income Taxes](index=23&type=section&id=Provision%20for%20Income%20Taxes) This subsection outlines the effective tax rate for Q1 2020, noting a slight increase primarily due to changes in tax benefits from stock-based compensation - The effective tax rate (ETR) for Q1 2020 was **25%**, an increase from **24%** in Q1 2019[78](index=78&type=chunk) - The change in ETR was primarily driven by a **2%** increase from a decrease in tax benefits related to stock-based compensation, partially offset by a **1%** decrease from a benefit associated with prior year tax expense[78](index=78&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity and capital resources, distinguishing between corporate and WSE-related funds. Corporate working capital increased, supported by operating cash flow, while a significant draw-down on the revolving credit facility in March 2020 enhanced short-term cash reserves in response to COVID-19 uncertainties [Liquidity](index=24&type=section&id=Liquidity) This subsection asserts TriNet's sufficient liquidity, distinguishing corporate funds from WSE-related funds, and highlights an increase in corporate working capital - TriNet believes it has sufficient liquidity and capital resources to meet future requirements and obligations to clients, creditors, and debt holders[79](index=79&type=chunk) - The company distinguishes and manages corporate assets and liabilities separately from those associated with WSEs, such as payroll and benefits obligations, which are generally prefunded by clients[80](index=80&type=chunk)[81](index=81&type=chunk) Working Capital (March 31, 2020 vs. December 31, 2019) | Metric | March 31, 2020 (millions) | Dec 31, 2019 (millions) | | :-------------------- | :------------------------ | :------------------------ | | Corporate Working Capital | $284 | $228 | | Total Current Assets | $1,892 | $1,871 | | Total Current Liabilities | $1,608 | $1,643 | - Corporate working capital increased by **$56 million** in Q1 2020, driven by positive operating cash flow, and existing corporate cash and working capital are expected to be sufficient for at least the next twelve months[83](index=83&type=chunk) [Cash Flows](index=25&type=section&id=Cash%20Flows) This subsection details the company's cash flow activities, noting an increase in corporate operating cash flows despite higher net cash used in overall operating activities Cash Flow Activities (Three Months Ended March 31) | Activity | 2020 (millions) | 2019 (millions) | | :---------------------------------- | :-------------- | :-------------- | | Net cash used in operating activities | $(282) | $(142) | | Net cash used in investing activities | $(94) | $(11) | | Net cash provided by (used in) financing activities | $185 | $(47) | | Net increase (decrease) in cash and cash equivalents | $(191) | $(200) | - Corporate operating cash flows increased to **$119 million** in Q1 2020 from **$78 million** in Q1 2019, driven by increased net income and timing of vendor payments[84](index=84&type=chunk)[86](index=86&type=chunk) - Net cash used in operating activities for WSE purposes significantly increased, primarily due to the timing of client payments, payroll and payroll tax payments, and collateral funding and insurance claim activities[85](index=85&type=chunk) [Investing Activities](index=26&type=section&id=Investing%20Activities) This subsection explains the significant increase in net cash used in investing activities, primarily due to higher investment purchases, while maintaining a substantial cash and investment portfolio Investing Activities (Three Months Ended March 31) | Activity | 2020 (millions) | 2019 (millions) | | :---------------------------------- | :-------------- | :-------------- | | Purchases of investments | $(155) | $(30) | | Proceeds from sale and maturity of investments | $67 | $31 | | Cash provided by (used in) investments | $(88) | $1 | | Cash used in capital expenditures | $(6) | $(12) | | **Net cash used in investing activities** | **$(94)** | **$(11)** | - Net cash used in investing activities significantly increased in Q1 2020, primarily due to higher purchases of investments, partially offset by proceeds from sales and maturities[87](index=87&type=chunk)[88](index=88&type=chunk) - As of March 31, 2020, the company held approximately **$1.7 billion** in cash, cash equivalents, and investments, including **$521 million** in unrestricted cash and **$195 million** in unrestricted investments[90](index=90&type=chunk) - The company continues to invest in software and hardware to enhance existing products and its technology platform[91](index=91&type=chunk) [Financing Activities](index=26&type=section&id=Financing%20Activities) This subsection details the substantial cash provided by financing activities, driven by a $234 million draw-down on the revolving credit facility and ongoing stock repurchases Financing Activities (Three Months Ended March 31) | Activity | 2020 (millions) | 2019 (millions) | | :---------------------------------- | :-------------- | :-------------- | | Repurchase of common stock, net of issuance | $(43) | $(41) | | Draw down from revolving credit facility | $234 | $0 | | Repayment of borrowings | $(6) | $(6) | | **Cash provided by (used in) financing activities** | **$185** | **$(47)** | - In March 2020, the company drew down **$234 million** from its revolving credit facility to enhance short-term cash reserves in response to economic uncertainties from COVID-19[96](index=96&type=chunk) - The board authorized a **$300 million** incremental increase to the stock repurchase program in February 2020. In Q1 2020, the company repurchased **747,417 shares** for approximately **$40 million**, with **$495 million** remaining available for repurchase as of March 31, 2020[93](index=93&type=chunk)[95](index=95&type=chunk) [Capital Resources](index=28&type=section&id=Capital%20Resources) This subsection describes the primary sources of liquidity for operations and WSE-related cash flows, affirming the sufficiency of existing assets and cash flows for future needs - The principal source of liquidity for operations is cash provided by operating activities, which is used to meet short-term needs like corporate payroll and capital expenditures[97](index=97&type=chunk) - Cash flow related to WSE payroll and benefits is generally matched by advance collections from clients, who are required to prefund payroll and related taxes/benefits costs to minimize credit risk[97](index=97&type=chunk) - The company believes existing liquid assets and continuing cash flows from corporate operating activities are sufficient to meet present and reasonably foreseeable operating cash needs and future commitments[98](index=98&type=chunk) [Covenants](index=28&type=section&id=Covenants) This subsection confirms TriNet's compliance with all financial covenants under its credit facilities as of March 31, 2020 - TriNet was in compliance with all financial covenants under its credit facilities as of March 31, 2020[99](index=99&type=chunk) [Off-Balance Sheet Arrangements](index=28&type=section&id=Off-Balance%20Sheet%20Arrangements) This subsection states that there have been no material changes to the company's off-balance sheet arrangements since the 2019 Form 10-K filing - There have been no additional material changes in the company's off-balance sheet arrangements since the 2019 Form 10-K[100](index=100&type=chunk) [Critical Accounting Policies, Estimates and Judgments](index=28&type=section&id=Critical%20Accounting%20Policies%2C%20Estimates%20and%20Judgments) This subsection confirms no material changes to the company's critical accounting policies since the 2019 Form 10-K - There have been no material changes to the company's critical accounting policies as discussed in its 2019 Form 10-K[101](index=101&type=chunk) [Recent Accounting Pronouncements](index=28&type=section&id=Recent%20Accounting%20Pronouncements) This subsection details the adoption of ASU 2016-13 (ASC Topic 326) effective January 1, 2020, and its immaterial impact on financial statements - The company adopted ASU 2016-13 – Financial Instruments – Credit Losses (ASC Topic 326) effective January 1, 2020, using a modified retrospective approach[102](index=102&type=chunk)[137](index=137&type=chunk) - The adoption of ASC Topic 326 did not have a material effect on the company's financial statements[137](index=137&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Part%20I%2C%20Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses TriNet's exposure to market risks, primarily interest rate fluctuations affecting its investment portfolio and floating rate debt, and its hedging strategies - TriNet's exposure to changes in interest rates primarily relates to its investment portfolio and outstanding floating rate debt, affecting interest earned on cash/investments and interest costs on debt[104](index=104&type=chunk) - In June 2019, the company entered into an interest rate collar derivative transaction to hedge against interest rate risk on a portion of its floating rate debt, designating it as a cash flow hedge to reduce volatility in net earnings and cash flows[105](index=105&type=chunk) Interest Rate Sensitivity Analysis (March 31, 2020) | Scenario | Impact on Cash Flows (1-month LIBOR) | | :---------------------------------- | :----------------------------------- | | 100 basis point increase | No cash receipts | | 100 basis point decrease | $2 million cash payments | | 100 basis point increase on $620 million debt | $6 million increase in interest expense | | 100 basis point decrease on $620 million debt | $5 million decrease in interest expense | - The company limits exposure to interest rate and credit risk by investing in highly liquid, investment-grade securities that meet specific policy requirements[107](index=107&type=chunk) [Controls and Procedures](index=29&type=section&id=Part%20I%2C%20Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, including any changes in internal control over financial reporting and inherent limitations [Evaluation of Disclosure Controls and Procedures](index=29&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The CEO and CFO evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2020, concluding they were effective in ensuring timely and accurate reporting of required information - The CEO and CFO evaluated the effectiveness of disclosure controls and procedures as of March 31, 2020[110](index=110&type=chunk) - They concluded that the company's disclosure controls and procedures were effective in ensuring that required information is accumulated, communicated to management, and reported within specified SEC time periods[111](index=111&type=chunk) - The condensed consolidated financial statements in this Form 10-Q fairly present, in all material respects, the company's financial position, results of operations, and cash flows in conformity with GAAP[112](index=112&type=chunk) [Changes in Internal Control Over Financial Reporting](index=29&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No changes in internal control over financial reporting were identified during Q1 2020 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - No changes in internal control over financial reporting were identified during the quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[113](index=113&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=29&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) Management acknowledges that, despite careful design and operation, any controls and procedures can only provide reasonable assurance of achieving desired objectives due to inherent resource constraints and the need for judgment in evaluating cost-benefit trade-offs - Management recognizes that controls and procedures, no matter how well designed, can only provide reasonable assurance of achieving desired control objectives[115](index=115&type=chunk) - The design of controls must account for resource constraints and require management to apply judgment in evaluating the benefits of controls relative to their costs[115](index=115&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=31&type=section&id=Part%20I%2C%20Item%201.%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents TriNet's unaudited condensed consolidated financial statements, including income statements, balance sheets, statements of stockholders' equity, and cash flows, along with detailed notes [Condensed Consolidated Statements of Income and Comprehensive Income](index=31&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) The company reported significant year-over-year growth in Q1 2020, with total revenues increasing by 12% and net income by 44%, driven by higher professional and insurance service revenues and improved operating income Condensed Consolidated Statements of Income and Comprehensive Income (Three Months Ended March 31) | Metric (in millions, except per share data) | 2020 | 2019 | | :------------------------------------------ | :--- | :--- | | Professional service revenues | $156 | $136 | | Insurance service revenues | $892 | $798 | | **Total revenues** | **$1,048** | **$934** | | Insurance costs | $765 | $683 | | Total costs and operating expenses | $928 | $852 | | **Operating income** | **$120** | **$82** | | Income before provision for income taxes | $121 | $83 | | Income taxes | $30 | $20 | | **Net income** | **$91** | **$63** | | Other comprehensive income, net of income taxes | $2 | $0 | | Comprehensive income | $93 | $63 | | Basic EPS | $1.32 | $0.91 | | Diluted EPS | $1.31 | $0.89 | | Weighted average shares (Basic) | 68 | 70 | | Weighted average shares (Diluted) | 69 | 71 | [Condensed Consolidated Balance Sheets](index=32&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2020, the company's balance sheet shows a slight increase in total assets, a significant increase in debt due to revolving credit agreement borrowings, and growth in stockholders' equity. Current assets and liabilities saw shifts, including a decrease in restricted cash and an increase in accounts payable Condensed Consolidated Balance Sheets (as of March 31, 2020 and December 31, 2019) | Metric (in millions) | March 31, 2020 | Dec 31, 2019 | | :------------------------------------------ | :------------- | :----------- | | **ASSETS** | | | | Cash and cash equivalents | $521 | $213 | | Investments | $65 | $68 | | Restricted cash, cash equivalents and investments | $779 | $1,180 | | Unbilled revenue, net | $380 | $285 | | Total current assets | $1,892 | $1,871 | | Total assets | $2,765 | $2,748 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable and other current liabilities | $63 | $31 | | Revolving credit agreement borrowings | $234 | $0 | | Payroll tax liabilities and other payroll withholdings | $567 | $901 | | Total current liabilities | $1,608 | $1,643 | | Long-term debt, noncurrent | $364 | $369 | | **Total liabilities** | **$2,232** | **$2,273** | | Common stock and additional paid-in capital | $703 | $694 | | Accumulated deficit | $(172) | $(219) | | Accumulated other comprehensive income | $2 | $0 | | **Total stockholders' equity** | **$533** | **$475** | [Condensed Consolidated Statements of Stockholders' Equity](index=34&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased to $533 million by March 31, 2020, from $475 million at the end of 2019, primarily driven by net income and stock-based compensation, partially offset by common stock repurchases Condensed Consolidated Statements of Stockholders' Equity (Three Months Ended March 31) | Metric (in millions) | 2020 | 2019 | | :------------------------------------------ | :--- | :--- | | **Total Stockholders' Equity, beginning balance** | **$475** | **$375** | | Common Stock and Additional Paid-In Capital (ending) | $703 | $651 | | Accumulated Deficit (ending) | $(172) | $(245) | | Accumulated Other Comprehensive Income (ending) | $2 | $0 | | **Total Stockholders' Equity, ending balance** | **$533** | **$406** | | Net income | $91 | $63 | | Stock based compensation expense | $9 | $9 | | Repurchase of common stock | $(40) | $(38) | | Awards effectively repurchased for required employee withholding taxes | $(4) | $(4) | [Condensed Consolidated Statements of Cash Flows](index=35&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net decrease in cash and cash equivalents in Q1 2020, with significant cash used in operating and investing activities. However, financing activities provided substantial cash, primarily due to a $234 million draw-down on the revolving credit facility Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | Activity (in millions) | 2020 | 2019 | | :------------------------------------------ | :--- | :--- | | Net cash used in operating activities | $(282) | $(142) | | Net cash used in investing activities | $(94) | $(11) | | Net cash provided by (used in) financing activities | $185 | $(47) | | **Net decrease in cash and cash equivalents, unrestricted and restricted** | **$(191)** | **$(200)** | | Cash and cash equivalents, end of period | $1,265 | $1,149 | | Purchases of marketable securities | $(155) | $(30) | | Proceeds from sales and maturities of marketable securities | $67 | $31 | | Proceeds from revolving credit agreement borrowings | $234 | $0 | | Repurchase of common stock | $(40) | $(38) | [Notes to Condensed Consolidated Financial Statements](index=36&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's business, significant accounting policies, and specific financial statement line items. Key disclosures include the adoption of new accounting guidance, composition of cash and investments, fair value measurements, workers' compensation liabilities, details of revolving credit borrowings, commitments, stock-based compensation, stockholders' equity, income taxes, and EPS calculations [Note 1: Description of Business and Significant Accounting Policies](index=36&type=section&id=NOTE%201.%20DESCRIPTION%20OF%20BUSINESS%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines TriNet's PEO business model, its co-employment relationship, and key accounting policies for payroll, investments, and insurance costs, including the adoption of new accounting guidance - TriNet Group, Inc. operates as a professional employer organization (PEO), providing comprehensive HR solutions for small to midsize businesses under a co-employment model, acting as the employer of record for administrative and regulatory purposes[123](index=123&type=chunk) - The company recognizes WSE payroll and payroll tax liabilities in the period work is performed, with associated receivables recorded as unbilled revenue, offset by advance client collections[128](index=128&type=chunk) - Investments are primarily classified as available-for-sale (AFS) and carried at estimated fair value, with unrealized gains and losses reported in accumulated other comprehensive income[129](index=129&type=chunk)[130](index=130&type=chunk) - Accrued health insurance costs are established for estimated unpaid costs of reimbursing carriers for claims within the deductible layer of risk-based policies, assessed based on actuarial studies and claims patterns[135](index=135&type=chunk) - The adoption of ASU 2016-13 (ASC Topic 326) effective January 1, 2020, did not have a material effect on the company's financial statements[137](index=137&type=chunk) [Note 2: Cash, Cash Equivalents and Investments](index=38&type=section&id=NOTE%202.%20CASH%2C%20CASH%20EQUIVALENTS%20AND%20INVESTMENTS) This note details the composition of TriNet's cash, cash equivalents, and investments, including restricted funds held for workers' compensation, health benefits, and client payroll - The company is required to maintain collateral in trust accounts for workers' compensation and health benefit insurance carriers, which are reported as restricted cash, cash equivalents, and investments[138](index=138&type=chunk) - Client payroll funds collected (PFC) for pending payrolls and tax liabilities are also included in restricted cash, cash equivalents, and investments[139](index=139&type=chunk) - Available corporate funds are invested primarily in fixed income securities classified as available-for-sale (AFS)[140](index=140&type=chunk) Total Cash, Cash Equivalents and Investments (March 31, 2020) | Category | Amount (millions) | | :------------------------------------------ | :---------------- | | Cash and cash equivalents | $521 | | Investments | $65 | | Restricted cash, cash equivalents and investments | $779 | | Investments, noncurrent | $130 | | Restricted cash, cash equivalents and investments, noncurrent | $204 | | **Total** | **$1,699** | [Note 3: Investments](index=38&type=section&id=NOTE%203.%20INVESTMENTS) This note provides a breakdown of the company's available-for-sale investments by type, fair value, and credit quality, along with details on unrealized gains and losses Available-for-Sale (AFS) Investments Fair Value (March 31, 2020) | Investment Type | Fair Value (millions) | | :------------------------------------------ | :-------------------- | | Asset-backed securities | $30 | | Corporate bonds | $126 | | U.S. government agencies and government sponsored agencies | $25 | | U.S. treasuries | $244 | | Certificate of deposit | $1 | | Other debt securities | $8 | | **Total** | **$434** | - As of March 31, 2020, gross unrealized gains on AFS investments were **$7 million**, and gross unrealized losses were immaterial[143](index=143&type=chunk)[144](index=144&type=chunk) - The company's AFS investments had a weighted average duration of **1.09 years** and an average S&P credit rating of **AA+** as of March 31, 2020[89](index=89&type=chunk) - Gross proceeds from sales and maturities of AFS securities for Q1 2020 totaled **$67 million**, with immaterial realized gains and losses[146](index=146&type=chunk) [Note 4: Financial Instruments and Fair Value Measurements](index=40&type=section&id=NOTE%204.%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS) This note describes the methodologies for fair value measurements of financial instruments, including cash equivalents, investments, debt, and derivatives, categorized by fair value hierarchy levels - The company uses an independent pricing source that utilizes various pricing models and market observable inputs (e.g., comparable trades, dealer quotes, credit spreads) to determine the fair value of its securities[147](index=147&type=chunk) Fair Value Measurements on a Recurring Basis (March 31, 2020) | Instrument Type (in millions) | Level 1 | Level 2 | Total | | :------------------------------------------ | :------ | :------ | :---- | | Cash equivalents (Money market mutual funds) | $328 | $0 | $328 | | Investments (Asset-backed, Corporate bonds, U.S. gov. agencies, U.S. treasuries, Other debt) | $0 | $195 | $195 | | Restricted cash equivalents (Money market mutual funds, Commercial paper, Certificate of deposit) | $104 | $1 | $105 | | Restricted investments (Corporate bonds, U.S. gov. agencies, U.S. treasuries, Certificate of deposit) | $0 | $239 | $239 | | **Total cash equivalents and investments and restricted cash equivalents and investments** | **$432** | **$435** | **$867** | - As of March 31, 2020, the total long-term debt and revolving credit agreement borrowings had a carrying value of **$620 million** and a fair value of **$607 million**, classified as Level 3 in the fair value hierarchy[154](index=154&type=chunk) - The interest rate collar derivative, designated as a cash flow hedge, had an immaterial fair value liability of **$1 million** at March 31, 2020, and is classified as Level 2[156](index=156&type=chunk)[157](index=157&type=chunk) [Note 5: Accrued Workers' Compensation Costs](index=44&type=section&id=NOTE%205.%20ACCURRED%20WORKERS%27%20COMPENSATION%20COSTS) This note details the activity and balance of accrued workers' compensation costs, including incurred claims and payments, and the impact of prior year loss emergence Accrued Workers' Compensation Cost Activity (Three Months Ended March 31) | Metric (in millions) | 2020 | 2019 | | :------------------------------------------ | :--- | :--- | | Total accrued costs, beginning of period | $214 | $238 | | Incurred (Current year) | $20 | $19 | | Incurred (Prior years) | $(3) | $(5) | | Paid (Current year) | $(1) | $(1) | | Paid (Prior years) | $(13) | $(15) | | **Total accrued costs, end of period** | **$217** | **$236** | - The change in incurred claims related to prior years for Q1 2020 was primarily due to lower than expected loss emergence for more recent plan years[159](index=159&type=chunk) - As of March 31, 2020, **$9 million** of collateral held by insurance carriers was offset against accrued workers' compensation costs[160](index=160&type=chunk) [Note 6: Revolving Credit Agreement Borrowings](index=45&type=section&id=NOTE%206.%20REVOLVING%20CREDIT%20AGREEMENT%20BORROWINGS) This note provides details on the $234 million revolving credit facility borrowing, its interest rate, collateral, and the company's compliance with financial covenants - As of March 31, 2020, the company had **$234 million** in revolving credit facility borrowings, drawn in March 2020 to enhance short-term cash reserves in response to economic uncertainties from COVID-19[96](index=96&type=chunk)[161](index=161&type=chunk) - The 2018 Revolver has a variable interest rate based on LIBOR plus **1.625%** (as of March 31, 2020) and is payable by June 2023[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) - Borrowings under the 2018 Revolver are secured by substantially all of the company's assets, excluding certain customary and WSE-related assets[163](index=163&type=chunk) - The company was in compliance with all financial covenants under the credit facilities at March 31, 2020[165](index=165&type=chunk) [Note 7: Commitments and Contingencies](index=46&type=section&id=NOTE%207.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discusses the company's involvement in various litigation matters and claims, noting management's assessment that these will not materially impact financial results - The company is involved in various litigation matters, legal proceedings, and claims arising in the ordinary course of business, including disputes with clients and class/collective actions related to its co-employment relationship[166](index=166&type=chunk) - While agreements with clients contain indemnification provisions, the company may not always be able to avail itself of such provisions[166](index=166&type=chunk) - Management currently does not believe that any such claims or proceedings will have a materially adverse effect on the company's consolidated financial position, results of operations, or cash flows[167](index=167&type=chunk) [Note 8: Stock Based Compensation](index=46&type=section&id=NOTE%208.%20STOCK%20BASED%20COMPENSATION) This note details stock-based compensation expense, grants of Restricted Stock Units (RSUs), and the number of nonvested shares outstanding - Stock-based compensation expense for Q1 2020 was **$9 million**, consistent with Q1 2019[172](index=172&type=chunk) - Under the 2019 Equity Incentive Plan, **759,856** time-based Restricted Stock Units (RSUs) and **183,981** performance-based RSUs were granted in Q1 2020[171](index=171&type=chunk) - As of March 31, 2020, **1,716,356** time-based shares and **314,590** performance-based shares remained nonvested[171](index=171&type=chunk) [Note 9: Stockholders' Equity](index=47&type=section&id=NOTE%209.%20STOCKHOLDERS%27%20EQUITY) This note outlines the changes in total stockholders' equity, common shares outstanding, and details of the stock repurchase program, including shares repurchased and remaining authorization - Total stockholders' equity increased to **$533 million** as of March 31, 2020, from **$475 million** at December 31, 2019[119](index=119&type=chunk)[120](index=120&type=chunk) - The number of common shares issued and outstanding as of March 31, 2020, was **68,470,050**[173](index=173&type=chunk) - In Q1 2020, the company repurchased **747,417 shares** of common stock for approximately **$40 million** under its stock repurchase program[176](index=176&type=chunk) - The board of directors authorized a **$300 million** incremental increase to the stock repurchase program in February 2020, with approximately **$495 million** remaining available for repurchase as of March 31, 2020[175](index=175&type=chunk)[176](index=176&type=chunk) [Note 10: Income Taxes](index=49&type=section&id=NOTE%2010.%20INCOME%20TAXES) This note explains the effective income tax rate for Q1 2020 and discusses ongoing litigation with the U.S. government regarding employment tax credits - The effective income tax rate for Q1 2020 was **25%**, a slight increase from **24%** in Q1 2019, primarily due to a decrease in tax benefits related to stock-based compensation[177](index=177&type=chunk) - The company is involved in ongoing litigation with the U.S. government regarding a **$15 million** judgment in its favor for disallowed employment tax credits, with an appeal filed by the U.S. in March 2019[180](index=180&type=chunk) [Note 11: Earnings Per Share (EPS)](index=49&type=section&id=NOTE%2011.%20EARNINGS%20PER%20SHARE%20(EPS)) This note presents the calculation of basic and diluted earnings per share, highlighting the increase in diluted EPS for Q1 2020 Earnings Per Share (Three Months Ended March 31) | Metric (in millions, except per share data) | 2020 | 2019 | | :------------------------------------------ | :--- | :--- | | Net income | $91 | $63 | | Weighted average shares of common stock outstanding (Basic) | 68 | 70 | | Basic EPS | $1.32 | $0.91 | | Weighted average shares of common stock outstanding (Diluted) | 69 | 71 | | Diluted EPS | $1.31 | $0.89 | - Diluted EPS for Q1 2020 was **$1.31**, an increase from **$0.89** in Q1 2019, based on net income of **$91 million** and **69 million** diluted weighted average shares outstanding[181](index=181&type=chunk) [Legal Proceedings](index=50&type=section&id=Part%20II%2C%20Item%201.%20Legal%20Proceedings) This section directs readers to Note 7 of the financial statements for detailed information regarding the company's legal proceedings and claims - For information regarding legal proceedings, refer to Note 7, 'Commitments and Contingencies,' in the condensed consolidated financial statements[182](index=182&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Part%20II%2C%20Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchases during Q1 2020, including the number of shares, average price, and remaining authorization under the stock repurchase program Issuer Purchases of Equity Securities (Q1 2020) | Period | Total Number of Shares Purchased | Weighted Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans ($ millions) | | :----------------------- | :------------------------------- | :-------------------------- | :-------------------------------------------------------------------------------- | | January 1-31, 2020 | 303,925 | $56.68 | $219 | | February 1-29, 2020 | 354,722 | $56.84 | $501 | | March 1-31, 2020 | 139,896 | $42.78 | $495 | | **Total** | **798,543** | | | - The company repurchased approximately **$40 million** of its common stock during Q1 2020, primarily to offset dilution from equity-based incentive compensation[185](index=185&type=chunk) - As of March 31, 2020, approximately **$495 million** remained available for repurchases under the stock repurchase program[185](index=185&type=chunk) [Defaults Upon Senior Securities](index=50&type=section&id=Part%20II%2C%20Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities for the reported period - This section is not applicable to the company for the reported period[187](index=187&type=chunk) [Mine Safety Disclosures](index=50&type=section&id=Part%20II%2C%20Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company for the reported period - This section is not applicable to the company for the reported period[188](index=188&type=chunk) [Other Information](index=50&type=section&id=Part%20II%2C%20Item%205.%20Other%20Information) This section indicates that there is no other information applicable to the company for the reported period - This section is not applicable to the company for the reported period[189](index=189&type=chunk) [Exhibits](index=51&type=section&id=Part%20II%2C%20Item%206.%20Exhibits) This section lists all exhibits filed with the report, including corporate documents, certifications, and XBRL data, providing supplementary information and regulatory compliance - The report includes an Exhibit Index listing various documents incorporated by reference or filed herewith, such as the Amended and Restated Certificate of Incorporation, Bylaws, Registration Rights Agreement, and several forms of Restricted Stock Unit Grant Notices[190](index=190&type=chunk)[192](index=192&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are also included as exhibits[192](index=192&type=chunk) - XBRL (eXtensible Business Reporting Language) instance and taxonomy documents are provided for interactive data filing[192](index=192&type=chunk)[194](index=194&type=chunk) [Signatures](index=54&type=section&id=SIGNATURES) This section provides the official signatures of TriNet Group, Inc.'s principal executive, financial, and accounting officers, certifying the accuracy of the report - The report is signed on April 28, 2020, by Burton M. Goldfield (Chief Executive Officer), Richard Beckert (Chief Financial Officer), and Michael P. Murphy (Chief Accounting Officer) of TriNet Group, Inc[197](index=197&type=chunk)[199](index=199&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2019 or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36373 TRINET GROUP, INC. (Exact Name of Registrant as Specified in its Charter) (State or other jurisdiction of incorporation or organization) ...