TriNet Group, Inc. (NYSE:TNET) Q2 2023 Earnings Call Transcript

Burton M. Goldfield: Great question, Andrew. So it is directly related to two things. One is retention and the second is the maturation of the sales force. That calculation is based on being here at least six months where they start to deliver results for us. So you are seeing reps staying longer and we are — they are not aging out and leaving, and you are also seeing some of the hiring we started last year, obviously, once they pass at the six-month mark, they become part of that equation. So look, I talked early in the year about the fact that capacity was well below what my expectation was. Under new sales leadership with some of the actions we have taken around optimization of both the marketing and the sales process. We are seeing that come to root [ph] in terms of not only ACV, which is important, but also in capacity as we move forward.

Andrew Nicholas: Great. That’s helpful. And then for my follow-up, I wanted to check in on Zenefits. I think last quarter, you mentioned onboarding or launching the integrated open market product. Just wondering how that’s going. And then also within that question, it looks like the average HCM users declined quite a bit year-over-year, anything to call out there?

Burton M. Goldfield: Yeah. So again a really good question. The Zenefits platform is doing very well as our core platform for the next-generation. The integrated open market or IOM solution is in the market. It’s still a small percentage of the revenue, but we are also looking at variants of other products leveraging the ben admin capabilities that Zenefits brought us, as well as their core platform. So, ultimately, my goal was to be breakeven in 2024. We are well into achieving that goal and we are hoping to be able to build the barbell out so we will be able to attract and retain more of those customers. But the primary focus right now is building and developing on the Zenefits platform for the next-generation to frankly leapfrog some of the technology in the market today.

Kelly Tuminelli: Yeah. And Andrew, one thing I would just add to that on the hiring, your comment on the users is, we are seeing in the HRIS platform some of the similar dynamics in the customer base and customer hiring. So the first half hiring definitely was pressured similar to the PEO side.

Andrew Nicholas: Make sense. Thanks to both of you.

Burton M. Goldfield: Thank you.

Operator: The next question is from Jared Levine with TD Cowen. Please go ahead.

Jared Levine: Thank you. I just want to clarify in terms of the professional services revenue guide here, what drove reduction given 2Q CIE was previously expected negative but you came in positive here?

Kelly Tuminelli: Yeah. Jared, this is Kelly. Let me take that one. We did not assume the full quarter CIE to be negative last quarter. So we were slightly below our CIE expectations. I think the clarification is, April and May were pressured, June came in better than expected. So June looked very, very positive as we saw intern, seasonal workers, things like that come on Board and we are very encouraged by the trends we see there, but we did see softness in April and May. So really cumulatively, when I look at the full first half and really looked at the rest of the year, we are being cautious on CIE for the rest of the year, just assuming very modestly positive due to the fact that it’s been so uneven month-to-month.