Slide 1: TriNet Group, Inc. Investor Presentation
TriNet Group, Inc. Investor Presentation August – September 2018 © 2018 TriNet Group, Inc. All rights reserved. Reproduction or distribution in whole or part without express written permission is prohibited.
Slide 2: Disclaimer
Disclaimer Cautionary Note Regarding Forward-Looking Statements and Other Financial Information This presentation contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statemen
Slide 3: Investment Highlights
Investment Highlights • Innovation leader serving large, under-penetrated market • Differentiated vertical product offerings • Increased operational scale and financial leverage • Profitable growth and strong corporate cash generation © 2018 TriNet Group, Inc. All rights reserved. Reproduction or di
Slide 4: Market Opportunity
Market Opportunity Underpenetrated SMB Market Market Segmentation Complexity of Employer’s HR Needs Professional 59mm1 Main Street Services Hospitality Life Nonprofit Sciences Technology Basic Needs Financial Services Fewer than 6% of Small and Medium Sized Business (SMB) Worksite Employees (WSEs) I
Slide 5: Challenges Facing SMBs
Challenges Facing SMBs Compliance • Significant regulatory oversight • Risks for federal, state, and local Compliance noncompliance are high Complexity • Federal, state, and local regulations continue to diverge • Managing HR across multiple jurisdictions Cost Cost • SMBs pay multiple vendors and em
Slide 6: TriNet Solution: Four Pillars of Value
TriNet Solution: Four Pillars of Value BUSINESS PROCESS HR EXPERTISE BENEFITS COMPLIANCE EXCELLENCE Multi-state payroll Multiple industry specific Health insurance Federal, state & local processing and tax product and service coverage: medical, labor, employment & administration offerings dental & v
Slide 7: Vertical Strategy
Vertical Strategy TriNet Life Sciences TriNet Technology TriNet Main Street Q2 2015 Q4 2016 Q3 2017 TriNet Non Profit TriNet Financial TriNet Professional Q2 2016 Services Services Q4 2016 Q2 2018 • Different industries have different needs • SMBs seek partners who know their industries and can scal
Slide 8: Tech-Enabled Business Services Company
Tech-Enabled Business Services Company • Mobile app and online • Multi-state payroll access • Flexible time and attendance • Pay stub access • Benefit open enrollment and • PTO Scheduling administration • W2 access • Employee onboarding • Online medical cards • Expense management • Intuitive user in
Slide 9: Insurance Services
Insurance Services Workers’ Compensation Health Insurance • Provide fully insured, • Offer 100+ fully insured industry standard health plans, including $1 million per claim plans in all 50 states deductible policies • Scale enables us to offer • Assist clients by national and regional providing risk
Slide 10: Growth Strategy
Growth Strategy 1 Improve Retention 2 Drive New Sales 3 Acquisitions © 2018 TriNet Group, Inc. All rights reserved. Reproduction or distribution in whole or part without express written permission is prohibited. 8/8/2018 10
Slide 11: Growth Strategy: Improve Retention
Growth Strategy: Improve Retention FLEXIBLE SERVICE Flexible service model aligned to verticals VERTICAL PRODUCTS CLIENT EXPERIENCE Provide clients with Improve client experience user experience by leveraging Client Efforts to specific to their Relationship Executives Improve industry needs Retentio
Slide 12: Growth Strategy: New Sales
Growth Strategy: New Sales • Align sales force by geography and industry vertical • Recruit sales candidates from our targeted vertical industries • Retain, develop, and grow our sales force • Expand referral networks and industry relationships • Tie sales compensation to annual contract value Verti
Slide 13: Growth Strategy: Acquisitions
Growth Strategy: Acquisitions 2009 2013 2018 & Beyond • Infrastructure investment • New product offering Potential for Tuck-ins • East Coast processing • High-touch service model • Attractive vertical or center • Financial services focus geographic footprint • Scaled benefits and risk • Migrated to
Slide 14: 2018 Initiatives
2018 Initiatives Strengthen our operations, products, & 1 services on our single platform Increase operational leverage Return to sequential volume growth 2 2H 2018 Improve insurance plan structures & choice 3 Reduce administrative expenses Improve our client engagement model 4 Increase client reten
Slide 15: Financial Model
Financial Model Revenue Growth • Vertical strategy drives volume growth • Vertical products increase value received • Insurance products priced to risk EPS Growth from Operational Improvements • Improve our single platform and eliminate legacy platform • Use scale to reduce plan administrative costs
Slide 16: Revenue Model
Revenue Model Net Service Revenues FY20177 (in millions) Professional Service Revenues Fees charged to clients for $351 processing payroll-related transactions, access to our HR expertise, employment and benefit law compliance, and other HR- $458 related services. Net Insurance Service Revenues Work
Slide 17: Consistent Revenue Growth
Consistent Revenue Growth $3,275 $3,060 $2,659 $458 $447 $2,194 $401 $1,711 $342 $1,608 $244 $229 $2,817 $2,613 $2,258 $1,852 $1,379 $1,467 FY2014 FY2015 FY2016 FY2017 1H '17 1H '18 Insurance Revenues Professional Service Revenues Total Revenues 14% Organic GAAP Revenue CAGR From 2014 Through 2017 ©
Slide 18: Strong Net Service Revenues Growth
Strong Net Service Revenues Growth $3,275 $3,060 $809 $2,659 $2,194 $646 $547 $458 $1,711 $1,608 $507 $440 $400 $447 $342 $401 $244 $229 $351 $199 $171 $196 $165 $146 FY2014 FY2015 FY2016 FY2017 1H '17 1H '18 7 Net Insurance Service Revenues Professional Service Revenues Total Revenues Professional
Slide 19: Attractive EPS Growth
Attractive EPS Growth 43% 35% 34% 33% 28% 29% $2.49 $1.99 $1.55 $1.68 $1.20 $1.03 $0.97 $0.97 $0.96 $0.85 $0.44 $0.22 8 FY2014 FY2015 FY2016 FY2017 1H '17 1H '18 6,7,8 6,7 GAAP EPS Adjusted EPS Adj EBITDA Margin Strong Earnings Growth Supported by Expanding EBITDA Margins © 2018 TriNet Group, Inc. A
Slide 20: Capital Allocation
Capital Allocation 1 Reinvest in business — drive revenue growth and margin expansion Acquisitions —Tuck-ins and Technology — potential to target 2 geographies or verticals and improve products and/or operations Share repurchases primarily intended to offset dilution from 3 employee compensation pla
Slide 21: Summary
Summary • Innovation leader serving large, under penetrated market • Differentiated vertical product offering • Increased operational scale and financial leverage • Profitable growth and strong cash flow generation © 2018 TriNet Group, Inc. All rights reserved. Reproduction or distribution in whole
Slide 22: Appendix A
Appendix A Reconciliation of non-GAAP financial measures to GAAP financial measures © 2018 TriNet Group, Inc. All rights reserved. Reproduction or distribution in whole or part without express written permission is prohibited. 22
Slide 23: Appendix A
Appendix A Reconciliation of non-GAAP financial measures to GAAP financial measures © 2018 TriNet Group, Inc. All rights reserved. Reproduction or distribution in whole or part without express written permission is prohibited. 23
Slide 24: Appendix B
Appendix B Cash Flow – Please refer to our current Quarterly Report on Form 10Q for a more detailed discussion of our Statement of Cash Flows © 2018 TriNet Group, Inc. All rights reserved. Reproduction or distribution in whole or part without express written permission is prohibited. 24
Slide 25: Appendix C: End Notes
Appendix C End Notes 1 US Census Bureau 2015; the number of employees employed by firms with 500 or fewer employees 2 National Association of Professional Employer Organizations (NAPEO); NAPEO White Paper Series, An Economic Analysis: The PEO Industry Footprint, September 2015 3 US Census Bureau 201