Slide 1: TriNet Group, Inc. Investor Presentation
TriNet Group, Inc. Investor Presentation February 2020 – April 2020 © 2019 TriNet Group, Inc. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. Reproduction or distribution in whole or part without express written permis
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: The HR expertise to help drive SMB success
TriNet Group Inc. 30+ years in business The HR expertise 340,000+ to help drive SMB worksite employees* success. 18,000+ clients* $41B+ payroll managed * As of 12/31/19 © 2019 TriNet Group, Inc. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to the
Slide 4: Investment Highlights
Investment Highlights • Innovation leader serving large, under-penetrated market • Differentiated vertical product offerings • Increased operational scale and financial leverage • Profitable growth supported by strong corporate operating cash flows* *see Appendix B © 2019 TriNet Group, Inc. All righ
Slide 5: Market Opportunity: Underpenetrated SMB Market
Market Opportunity Underpenetrated SMB Market Market Characterization Complexity of Employer’s HR Needs Professional 59mm1 Services 59mm1 Main Street Life Nonprofit Sciences Technology Basic Needs Financial Services Approximately 6% of Small and Medium Sized Business (SMB) Worksite Employees Importa
Slide 6: Challenges Facing SMBs
Challenges Facing SMBs Compliance Compliance ⦁ Significant regulatory oversight ⦁ Risks for federal, state, and local 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 7: Common Product and Service Capabilities
Common Product and Service Capabilities Multiple Industry-specific Health insurance: medical, Multi-state payroll Workers’ compensation Online and mobile app for product and service offerings dental and vision processing and tax insurance coverage and real-time data access administration claims reme
Slide 8: Vertical Strategy
Vertical Strategy Financial Professional Life Science Nonprofit Technology Services Main Street Services Q2 2015 Q2 2016 Q4 2016 Q4 2016 Q3 2017 Q2 2018 • Different industries have different needs • SMBs seek partners who know their industries and can scale with them • Aligns sales force, product de
Slide 9: Tech-Enabled Business Services Company
Tech-Enabled Business Services Company ⦁ Multi-state payroll ⦁ Mobile app and online 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 10: Insurance Services
Insurance Services Workers’ Compensation Health Insurance ⦁ Provide fully insured, industry standard Workers’ ⦁ Offer 300+ fully insured health ⦁ $1 million per claim deductible policies plans, including plans in all 50 states Compensation ⦁ Scale enables us to offer national ⦁ Assist clients by pro
Slide 11: 2020 Growth Strategy
2020 Growth Strategy 1 Improve Retention 2 Drive New Sales 3 Potential Acquisitions © 2019 TriNet Group, Inc. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. Reproduction or distribution in whole or part without expres
Slide 12: Growth Strategy: Improve Retention
Growth Strategy: Improve Retention FLEXIBLE SERVICE Flexible service model aligned to verticals VERTICAL PRODUCTS CLIENT EXPERIENCE Provide clients with user Improve client experience by experience specific to leveraging Client Relationship Efforts to their industry needs Executives Improve Retentio
Slide 13: 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 14: Growth Strategy: Potential Acquisitions
Growth Strategy: Potential Acquisitions 2009 2013 2020 & Beyond ⦁ Infrastructure investment • New product offering Potential for Tuck-ins ⦁ East Coast processing center • High-touch service model ⦁ Attractive vertical or geographic ⦁ Scaled benefits and risk management • Financial services focus foo
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 • Use scale to reduce plan administrative costs • Process improvements Strong
Slide 16: Revenue Model
Revenue Model Net Service Revenues FY20185,6 Professional Service Revenues (in millions) Fees charged to clients for processing payroll-related transactions, access to our HR expertise, employment and benefit law $406 compliance, and other HR- related services. $399 $487 $530 Net Insurance Service R
Slide 17: Consistent Revenue Growth
Consistent Revenue Growth $3,856 $3,503 $3,275 $530 $3,060 $487 $2,659 $458 $447 $401 $3,326 $3,016 $2,817 $2,613 $2,258 FY2015 FY2016 FY2017 FY2018 FY2019 Insurance Service Revenues Professional Service Revenues Total Revenues 10% Organic GAAP Revenue CAGR7 From 2015 Through 2019 © 2019 TriNet Grou
Slide 18: Strong Net Service Revenues Growth
Strong Net Service Revenues5,6 Growth $3,856 $3,503 $3,275 $929 $3,060 $893 $809 $2,659 $646 $487 $530 $547 $458 $447 $401 $406 $399 $351 $199 $146 FY2015 FY2016 FY2017 FY2018 FY2019 Net Insurance Service Revenues 5,6 Professional Service Revenues Total Revenues 14% Organic Net Service Revenues5,6 C
Slide 19: Attractive EPS Growth
Attractive EPS Growth 41% 39% 35% 28% 29% $3.33 $3.02 $2.99 $2.65 $2.49 $1.99 $1.20 $0.97 $0.85 $0.44 FY2015 FY2016 FY2017 FY2018 FY2019 5,6 GAAP EPS Adjusted Net Income per Share Adj EBITDA Margin 5,6 Strong Earnings Growth Supported by Expanding EBITDA7 Margins © 2019 TriNet Group, Inc. All rights
Slide 20: Capital Allocation
Capital Allocation 1 Reinvest in business — drive revenue growth and margin expansion Potential Acquisitions —Tuck-ins and Technology — potential to target 2 geographies or verticals and improve products and/or operations Over $500 million remaining for share repurchases – intended to 3 offset dilut
Slide 21: Guidance
Guidance* FY 2020 Q1 2020 GAAP Total Revenue 10% - 13% 10% - 11% Net Service Revenues5 4% - 10% (5)% - 3% Adjusted EBITDA Margin5 ~41% 40% - 43% GAAP Earnings per Share 4% - 12% (12)% - 6% Adjusted Net Income per Share5 7% - 14% (12)% - 4% *see Appendix C for reconciliation of non-GAAP metrics © 201
Slide 22: Summary
Summary • Innovation leader serving large, under penetrated market • Differentiated vertical product offering • Increased operational scale and financial leverage • Profitable growth supported by corporate operating cash flow *see Appendix B © 2019 TriNet Group, Inc. All rights reserved. All tradema
Slide 23: Appendix A
Appendix A Reconciliation of non-GAAP financial measures to GAAP financial measures Reconciliation of GAAP to Non-GAAP Measures The table below presents a reconciliation of total revenues to Net Service Revenues: The table below presents a reconciliation of insurance service revenues to Net Insuranc
Slide 24: Appendix B
Appendix B Please refer to our most recent Annual Report and Quarterly Reports for a more detailed discussion of our Statement of Cash Flows © 2019 TriNet Group, Inc. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. Rep
Slide 25: Appendix B (continued)
Appendix B (continued) Please refer to our most recent Annual Report and Quarterly Reports for a more detailed discussion of our Statement of Cash Flows © 2019 TriNet Group, Inc. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective co
Slide 26: Appendix C
Appendix C Reconciliation of non-GAAP financial measures to GAAP financial measures © 2019 TriNet Group, Inc. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. Reproduction or distribution in whole or part without expres
Slide 27: Appendix C (continued)
Appendix C (continued) Reconciliation of non-GAAP financial measures to GAAP financial measures © 2019 TriNet Group, Inc. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. Reproduction or distribution in whole or part wi
Slide 28: Appendix C: End Notes
Appendix C End Notes 1 US Small Business Administration, Office of Advocacy, 2018 Small Business Profile; the total number of employees employed by firms with 500 or fewer employees. 2 National Association of Professional Employer Organizations (NAPEO); NAPEO White Paper Series #6, An Economic Analy