TriNet Group, Inc. (NYSE:TNET) Q3 2025 Earnings Call Transcript

TriNet Group, Inc. (NYSE:TNET) Q3 2025 Earnings Call Transcript October 29, 2025

TriNet Group, Inc. misses on earnings expectations. Reported EPS is $0.708 EPS, expectations were $0.72.

Operator: Good morning, and welcome to the TriNet Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Alex Bauer, Head of Investor Relations.

Alex Bauer: Thank you, operator. Good morning. My name is Alex Bauer, TriNet’s Head of Investor Relations. Thank you for joining us, and welcome to TriNet’s Third Quarter Conference Call and Webcast. I’m joined today by our President and CEO, Mike Simonds; and our CFO, Kelly Tuminelli. Before we begin, I would like to preview this morning’s call. I will first pass the call to Mike, where he will comment on our third quarter performance and discuss our progress on our strategy and medium-term outlook. Kelly will then review our Q3 financial performance in greater detail. Please note that today’s discussion will include references to our 2025 full year financial outlook, our medium-term outlook and other statements that are not historical in nature or predictive in nature or depend upon or refer to future events or conditions, such as our expectations, estimates, predictions, strategies, beliefs or other statements that might be considered forward-looking.

These forward-looking statements are based on management’s current expectations and assumptions and are inherently subject to risks, uncertainties and changes in circumstances that are difficult to predict and that may cause actual results to differ materially from statements being made today or in the future. Except as may be required by law, we do not undertake to update any of these statements in light of new information, future events or otherwise. We encourage you to review our most recent public filings with the SEC, including our 10-K and 10-Q filings for a more detailed discussion of the risks, uncertainties and changes in circumstances that may affect our future results or the market price of our stock. In addition, our discussion today will include non-GAAP financial measures, including our forward-looking guidance for adjusted EBITDA and adjusted net income per diluted share.

For reconciliations of our non-GAAP financial measures to our GAAP financial results, please see our earnings release, 10-Q filings or our 10-K filing, which are or will be available on our website or through the SEC website. With that, I will turn the call over to Mike. Mike?

Michael Simonds: Thank you, Alex, and good morning, everyone. We appreciate you joining us for the early start. Before discussing our third quarter results, I want to formally welcome Mala Murthy, who as announced this morning, will become TriNet’s Chief Financial Officer effective November 28, and I am sure is listening to the call this morning. Mala previously served as CFO of Teladoc Health and has more than 25 years of leadership experience, including business unit CFO for the Global Commercial segment at Amex and FP&A, corporate strategy and treasury experience at PepsiCo. I’m excited to have her join at a pivotal time for TriNet as our results increasingly reflect a strengthened foundation and our focus is on generating sustainable growth.

I know Mala looks forward to getting out and meeting you all over the coming months. I would also like to sincerely thank Kelly Tuminelli, our outgoing CFO, for her outstanding service and contributions to TriNet over the past 5 years. Kelly has played a vital role at TriNet during her tenure. She’s been a consistent and reliable voice to shareholders and has been a great partner to me as I transitioned into the company. I’m grateful for all her efforts and for her willingness to stay on as an adviser to me through the middle of March next year, supporting a seamless transition. Thank you, Kelly. Now let’s turn to the third quarter, which was a good one for TriNet. I’m pleased with our financial and operating performance, allowing us to adjust our full year earnings outlook upwards and towards the high end of our 2025 guidance range.

In the quarter, we made progress on several dimensions of our strategy. While overall market conditions remain difficult with persistently low SMB hiring and elevated health care costs in the areas we control, our execution is strong, our outlook is improving, and our confidence is growing as we work to reposition TriNet for long-term profitable growth. As a reminder, our medium-term strategy objectives include total revenues achieving a compounded annual growth rate of 4% to 6%, with our adjusted EBITDA margins expanding to 10% to 11%, which taken together will ultimately drive total annualized value creation of 13% to 15% through earnings growth supplemented by share repurchase and dividends. During the third quarter, revenues were in line with our plan.

And with just a quarter left in the year, we expect full year 2025 total revenues to be approximately $5 billion, near the midpoint of our full year guide. Our disciplined pricing and better-than-expected ASO sales have contributed to revenues in line with plan despite a decline in WSE volumes. I recognize that while revenues being in line with plan is encouraging, investors will also have questions on underlying WSE volumes and when to expect a return to growth on this metric. Before talking through the components of volume growth, I’d like to make 2 points as context. First, we look at both the absolute number and the quality of WSEs in our client base. While volumes are down, we are quite pleased with the strong and increasing quality and profitability of our customers.

Looking forward, we feel confident we have the high-quality client base alongside other levers at our disposal to achieve value creation in line with our medium-term strategy. Second, our health plan pricing relative to the market is important context. Partly because we had our own issues to fix, we moved earlier to address the escalating cost trend, taking a view that might initially have been thought to be conservative. That is, that the escalated trend would not abate in the short term. We now believe this assumption of persistent escalated trend is playing out as the prudent view. Moving more quickly and aggressively with health fee increases, which proved to be in line with the general health care market, we believe put us ahead of some other PEO competitors.

While this has clearly impacted our WSE volumes, we believe we are largely through the steepest part of the repricing and set up well for 2026. Based on what we are seeing in our new business pipeline and hearing from brokers, the pricing gap appears to be tightening. With those 2 points as context, let’s look a little deeper into our 3Q volume performance through the 3 drivers: customer hiring for CIE; retention; and new sales. Kelly will go into more detail on CIE later, but specific to the third quarter, we saw the normal exodus of summer seasonal workers in September. Even still, we are on track to see some overall improvement in CIE when compared with last year, albeit still at much lower levels than historical norms. On retention, while we remain on track to retain clients at or above our historical norm of 80%, we have seen a decline from prior year.

It’s worth noting that margins for terminated clients are considerably lower than for the overall client base. Further, in looking at our client exit research, it’s clear that health plan pricing is the driver as it was cited as the number one reason for termination, up from being the fourth largest reason cited a year ago. Controlling for the impact of health plan pricing, attrition was down year-over-year. And indeed, we feel very good about our improving service delivery. More than a dozen years ago, we established the Net Promoter Score as our primary measure of success from our clients’ perspective, and I’m happy to report that here in 2025, we’ve reached an all-time high in NPS. We believe there is a strong correlation between our investments and our service model and our strong NPS scores.

On that front, we recently announced the launch of our AI-powered suite of capabilities, which harnesses our extensive HR knowledge and delivers tailored output for our customers. The evolution of our service model continues, and AI will play a central role in this evolution. Turning to new sales. Sales were down in the quarter, though we are encouraged by the quality of new clients added. Looking ahead to the fourth quarter, we expect improvement in our year-over-year performance, and we’re excited about the January pipeline as well with strong contributions from the growth investments we’ve made. We continue to improve the retention of our senior, most productive reps, and the median tenure of our team continues to improve. At the same time, we’ve revamped our recruiting and training programs and have restarted our hiring with more confidence these new reps will reach productive status.

Our preferred broker program, which is comprised of 4 national partners, is currently in market. As a reminder, a feature of this program is the alignment of targets for new sales and retention as well as building out dedicated quoting sales and service teams. This program is already generating a growing share of our RFPs, increasing our optimism for Q4 and 2026. We’re also in market with our first set of benefit bundles, which seek to simplify the offering, streamline the sales process and better align cost and plan design needs for our clients. It’s increasingly clear that simplified benefit offerings will be an important part of our growth equation. So on revenue overall, we believe we are building the foundation for predictable and sustainable growth.

On margins, we’re making progress towards our 10% to 11% target. The two key levers for improving margins are getting back into our long-term insurance cost ratio range and managing operating expense growth. The third quarter saw us, again, realize health plan increases per enrolled member of approximately 10.5%. This is the cumulative increase after plan design buydowns, which clients use to manage fee increases and also has the effect of reducing risk to TriNet. Looking forward, we’re increasingly confident in our ability to return the insurance cost ratio back below the top end of our long-term range of 87% to 90% in 2026, while also allowing for more moderate and predictable pricing for our client base. On operating expenses, for the third straight quarter, we saw a year-over-year reduction, down 2% in 3Q.

The drivers of this performance remain the same, the application of technology to our business processes and continued talent optimization. With our expenses and pricing levels well managed, free cash flow is improving, which enables us to return capital to shareholders consistent with our history. In the third quarter, we repurchased stock and paid dividends totaling $45 million. In conclusion, we have a high-quality client base that is increasingly advocating for TriNet. We have a talented and engaged colleague base and an increasingly broad set of marketplace partners. We’re making progress on our growth and margin expansion initiatives and delivering against our financial objectives. Momentum is clearly building here at TriNet. With that, let me pass the call to Kelly for her review of our financial performance.

Kelly?

Kelly Tuminelli: Thank you, Mike. Before I jump into discussing the quarterly results, I do want to mention a few things about our leadership transition. My 5-plus-year tenure at TriNet working with our dedicated group of colleagues, who always put our customers first, has certainly been a highlight of my career. The entrepreneurial spirit of TriNet is unmatched, and it’s been an honor to help move the company forward on many fronts, including a focus on capital management. I have confidence in the management team to finish 2025 strong and make significant progress towards the medium-term strategy and shareholder value creation announced last February. I will remain on Board as an adviser to help support the team as they work through the year-end process.

Now let’s jump into the third quarter results. During the third quarter, we demonstrated continuing progress on benefit repricing and a focus on efficiency and cost discipline, resulting in a quarter that puts us at the top end of our annual EPS guidance. Total revenue in the quarter was down 2% on a year-over-year basis. Total revenue performance in the quarter reflected our decline in WSE volume, but was supported by prudent benefit repricing, putting us back in line with the general cost trends in the health care market. Interest income and pricing strength in professional service revenue also supported total revenue performance. Similar to our second quarter, interest income was higher than originally forecasted, driven by increased balances attributable to the timing of certain tax refunds.

The timing of these refunds remains intermittent and difficult to predict, particularly given the processing delays at the IRS. As we’ve continued our repricing focus, volume remained a headwind for revenue. We finished the quarter with approximately 332,000 total WSEs, down 7% year-over-year and 302,000 coemployed WSEs, down 9%. During Q3, we saw a continuation of many of the trends we’ve experienced in 2025. Attrition was elevated when compared to the last year due to our repricing efforts and new sales were down as our pricing reflected higher health care observed trends. CIE was flat to last year and a net negative in Q3 due to the offboarding of seasonal workers. Note that even with this, CIE is slightly higher than last year on a year-to-date basis by approximately 0.5 point.

Our year-to-date improvement has been driven mainly by the tech vertical, but we’ve also seen strength in hiring in financial services. This modest year-over-year improvement in CIE is in line with the guidance we laid out at the beginning of the year. As Mike indicated, we expect to see an improved year-over-year comparison for sales execution in the fourth quarter, and our January pipeline is benefiting from our growth initiatives. We’ve also been quite pleased with the high-quality customers we have added. Furthermore, our January cohort represents our last outsized renewal, and it’s our view that our pricing is increasingly aligned with claim trends and competition. Professional services revenue in the third quarter declined 8% year-over-year, largely due to two main reasons: lower WSE volumes; and the discontinuation of a specific client level technology fee of which we recognized $5 million in Q3 of last year.

As the technology fee was largely fully recognized in revenue through Q3 of 2024, beginning in the fourth quarter, it will no longer be a significant negative prior year comparison. Professional services revenue was supported by low to mid-single-digit pricing strength and stronger than originally forecasted HRIS and ASO revenue. On an absolute basis, HRIS fees and ASO revenues, including those resulting from HRIS conversions, decreased slightly year-over-year as the company transitions away from a SaaS-only solution. However, our ASO conversion rates continued to exceed initial forecast, indicating ongoing demand for our services. And because of our ASO pricing framework at $50 to $75 PEPM, this strong demand partially mitigated the impact of reduced PEO volume.

Insurance revenue and costs in the quarter each declined by 1%, resulting in an insurance cost ratio, just to touch over 90%, which was about flat to last year and slightly better than our embedded guidance. We attribute our improved performance to 2 items: our continued pricing discipline; and stabilization in health cost growth rates, albeit at elevated levels when compared with historical trends. While we’re pleased with our pricing discipline, we do acknowledge the adverse impact it has had on both retention and new sales in 2025. On retention, after the successful implementation of our January 2026 renewals, we believe that the catch-up will be behind us, and our pricing will be aligned with health insurance pricing trends moving forward.

On new sales, we believe that our pricing in the fourth quarter and fall selling season are already aligned with the market’s perception of current health care pricing levels. Each bodes well for continued improvements in 2026. Turning to expenses. Expenses in the quarter declined by 2% year-over-year. Our continued disciplined expense management is driven by further automation and our workforce strategy. I would like to reiterate that with a portion of the savings we realized, we funded our medium-term strategic initiatives, which are intended to drive growth, improve our customer experience and implement process efficiencies. I continue to be impressed by the improvements our colleagues are making on the items that will truly matter to our customers.

Third quarter GAAP earnings per share was $0.70, and our adjusted earnings per diluted share was $1.11. Our earnings were supported by continued improvement in our cash flow. In the quarter, we generated $100 million in adjusted EBITDA, representing an adjusted EBITDA margin of 8.2%. Through 3 quarters, operating activities generated $242 million in net cash and $191 million in free cash flow. Our free cash flow conversion now stands at 52% and is in line with our 2025 plan. Our capital return priorities for 2025 remain consistent. We aim to deliver shareholder value through continued investment and our value creation initiatives, funding dividends and share buybacks and maintaining a suitable operating liquidity buffer. In the quarter, we paid a $0.275 dividend per share, representing a 10% increase year-over-year and repurchased approximately $31 million in stock, bringing total capital deployment to $45 million.

For the year, we’ve deployed $162 million to shareholders or approximately 85% of our free cash flow ahead of our annual target of 75%. With the improvement in our financial performance, we continue to move closer to within the top end of our targeted leverage ratio of 1.5 to 2x EBITDA. Now let’s turn to our 2025 outlook. With just 1 quarter remaining and the benefit of 3 quarters of performance, we wanted to provide a little more color as to where we’re falling within our annual guidance range laid out in February. Given some of the volume impacts, offset by other favorability in 2025, we expect total revenue and professional service revenue to both come in near the midpoint of our originally stated range. Our insurance cost ratio is trending slightly better than the midpoint.

Altogether, this is bringing our adjusted EBITDA margin to the top half as well as our adjusted EPS closer to the top end of our originally disclosed range. In conclusion, we performed well in the third quarter, executing our medium-term initiatives, remaining disciplined in our pricing and prudently managing our expenses. While the operating environment remains challenging, especially for our customers and prospects, we are optimistic that our efforts to enhance our offerings are being received well in the marketplace. We believe that efforts to drive profitable growth, efficiencies and to return us to our targeted insurance cost ratio by 2026 are all on track. I’m proud of the continued execution by our dedicated colleagues, and I know our team is going to finish the year strong.

With that, I’ll pass the call to the operator for Q&A.

Q&A Session

Operator: [Operator Instructions] The first question comes from Jared Levine with TD Cowen.

Jared Levine: Just wanted to start by double-clicking on the ICR. Just wanted to clarify, were there any onetime impacts to your 3Q performance here? And then as you pointed to returning to that long-term ICR guide in FY ’26, can you just go over some of the assumptions there? Does that assume there’s any kind of deceleration in health care cost trends there?

Kelly Tuminelli: Jared, it’s Kelly. Happy to respond. Regarding the ICR…

Michael Simonds: Yes. I mean I think I’ll take the second one, Kelly, first. On the assumptions for next year, we’re going to stay pretty conservative about what health care trends is going to do next year. I think we’ve talked a little bit on this call that we saw about 4 quarters of very stable, albeit elevated trend. We started to see some of the shorter duration analysis show a little bit of improvement. We think it’s reasonable to assume you know health — Jared, on the margin just a tick or two lower than what we sort of experienced this year. But nothing that isn’t already reflected in some of those duration curves overall. And then I think the first question was just about.

Kelly Tuminelli: Onetimers, yes, really nothing notable in the quarter at all related to one-timers, Jared.

Jared Levine: Got it. And then in terms of the sales headcount there, can you just update us in terms of your expectations for ending sales headcount for FY ’25 here? And then how you’re thinking about at this stage FY ’26 in terms of continuing to grow that headcount?

Michael Simonds: Yes, happy to do that. And the strength of our sales force, the productivity and tenure, as you know, Jared, is a big part of the investments we’re making in growth. So in terms of tenure, I’ll actually start there, we continue to see the median tenure of our sales force increase. We see turnover at the 3-plus years of experience in reps, particularly over 48 months, our most productive reps be at or below historical loans. And that’s really, really important as we’re taking that kind of quality of salespeople through the selling season and into 2026. We did slow down, as you know, new rep recruiting early in this year as we really revamped that process. We’ve retooled, we are doing experienced rep hiring, but also some right out of college hiring to help sort of build a stronger culture and hopefully, a longer tenure in that team.

And that pause in the aggressiveness of hiring means we’ve got a smaller in aggregate, albeit more experienced sales force at the moment. I do expect that as those new trainees come on in 2026, we’ll start to see the absolute number grow in terms of the sales force next year.

Operator: The next question comes from Andrew Nicholas with William Blair.

Andrew Nicholas: I wanted to hone in on your comments around rate increases and pricing relative to competition. Is there anything that you could say either qualitatively or quantitatively on maybe just the magnitude of difference between the rate hikes that you’re going out to market with — or even with your existing client base with versus maybe what you suspect some of your competition is having to do this renewal season?

Michael Simonds: Andrew, I think we sort of tried to hit it in prepared remarks, but I think in general, when you think about health carriers out there, managed care, nobody saw the acceleration in trend come including us. We also had happened to be leaning in for about 6 quarters in terms of more aggressive and lower new business and retention pricing. So the timing wasn’t good. We had some issues on our front that sort of it compelled us to move pretty quickly and pretty conservatively when it came to pricing. And I think at this point, that proves fortuitous for us. We’re coming up on January 1 renewals being sort of our last kind of catch-up set of renewals. In terms of the magnitude of the difference, I wouldn’t think — it doesn’t need to be sort of a massive gap to be consequential just given the absolute cost of health care today in the small cases commercial market.

So I wouldn’t quantify the number, but I would say the evidence is sort of pointing towards when we look at what we see in our pipeline, what we’re hearing from our channel partners, kind of our most recent pretty good October sales month here sort of points to what that gap being through most of the year, tightening up here as we get to the end of the year and as we head into 2026.

Andrew Nicholas: Understood. And then maybe just a higher-level question on client decision-making. It’s been a choppy year for SMBs broadly with Liberation Day and tariffs and kind of all the uncertainty around that part of the market. Just curious what you’re seeing in terms of business optimism or hiring plans or maybe just business owners’ willingness to make budget decisions or HR decisions in this environment, whether or not there’s any change in that relative to the past couple of quarters?

Michael Simonds: Sure. Happy to do it. And I’m sure Kelly will have a couple of thoughts on what we’re seeing maybe by vertical on the CIE front. I would say high level, actually, we sort of have seen a little bit of settling in when I’m talking to clients and prospects. Like you said, there was a lot of optimism at the very beginning of the year, and then there was an immense amount of uncertainty, and I think some of the uncertainty has now become a little bit the new normal and people are just sort of realizing we are where we are, and they are making decisions. I’d say because health care costs have been so challenging for the market in total, that what we’re seeing a little bit is health care being pretty central to the PEO buy decision and people wanting to line that up around the January 1 start.

So we see some things that we normally would see in November, December getting pushed to January 1st, and a little bit just health care-specific dynamic, maybe a little bit of a slowdown in the buying process. But in general, I’d say it’s a pretty resilient small business client base that we’re seeing in our verticals, and CIE isn’t where we would want it to be, but it does look like we’re on track to see a bit of improvement this year over the full year last year. Kelly, I don’t know if you have anything to add?

Kelly Tuminelli: Yes. I mean the only thing I would add, Andrew, to Mike’s point, about 0.5 point better on a year-to-date basis related to CIE. But when you kind of pull the covers apart on that, what we’re really seeing is there’s less layoffs. So it’s not that there’s more people hiring, but there are less layoffs than there had been in the past. And it was a bright spot for us though, when we looked at most of our CIE growth has really been year-over-year in tech and financial services.

Operator: [Operator Instructions] The next question comes from Kyle Peterson with Needham.

Kyle Peterson: Thanks for the early call, make sure to get extra cup of coffee here. But I wanted to start off particularly on some of the new logo pipeline. I know you guys mentioned attrition has picked up a little bit, it sounds like with some of the insurance pricing, which obviously is kind of a necessary thing, given the environment. It sounds like you guys are a little ahead of some of your competitors. So I just wanted to see if you guys had any thoughts on if you think there’s an opportunity to maybe gain share or increase new logo sign-ups when as some of these other guys catch-up and push their own repricing through their books within the next, whether it’s 6 to 15 months or whatever the cycle ends up being for them?

Michael Simonds: We appreciate the early start, Kyle, on the extra cup of coffee. I think there is a little bit of an element. We’ve talked about it for a long time here at TriNet about repricing on our cohorts on a quarterly basis. I think over the last 4 quarters or so for the reasons we’ve talked about, we’re probably a little bit quicker and a little bit more conservative to move those prices on the health side up. We do look at our pricing on new business and a cohort of our renewals every 90 days or so. So I think it’s both the aggregate level and then the pace at which we put that pricing through tends to be a little bit quicker than maybe the average market participant. And I think it’s a reasonable assumption to say that while we certainly aren’t forecasting a big falloff in health care claim cost trends, we are seeing that tail down just a little bit.

And I think we can be responsive to that over the next 12 to 18 months, maybe a little bit quicker than the average market participant. But I think really what that does is as that gap to the market narrows, and we get in a position there where the broader value proposition can just shine through a little bit brighter. And for me, and I think for the team here, the fact that we’ve got a greater percentage of our clients advocating for us, you saw the kind of record high on the NPS. The fact that double-digit growth in broker-driven RFPs as that channel is really starting to open up. We’ve got a more tenured sales force. Our biggest 4Q wins so far actually is a benefit bundle proposition to a large employer that had a very distributed workforce, and we were able to bundle up the benefits in a way that sort of met their need for simplicity and hit a price point that made sense to their budget.

So I think there’s a bit of an opportunity here relative to pricing, but I think ultimately, it’s just about kind of clearing the decks. So the investments we’re making in growth can really come through.

Kyle Peterson: Okay. Fair enough. That’s good color. And then I guess just a follow-up on interest income. I know that’s been a big swing factor, and it’s been pretty resilient this year. I know there’s some timing impacts and rates maybe haven’t come down as fast as originally thought. But I guess, how should we think about that line item moving forward, especially just given some of the timing shifts on tax returns, it seems like rates are going to drift down some, but then you guys should be building cash too. So I guess like what’s a good run rate for that line moving forward? And how should we be thinking about the impacts of the timing shifts and the outsized benefit this quarter?

Kelly Tuminelli: Kyle, it’s a great question because it has been definitely a bright spot on our revenue for the year, for sure. We have had some catch-up interest associated with IRS tax refunds, and that did occur again this quarter. It’s a little uncertain due to the fact that the IRS is currently shut down. But other than that, we’re — just have small balances that we’re still expecting to receive some level of interest on. So I can’t really give you the forecast for catch-up interest for delayed payments there. But I think as we’re all watching what’s going on with rates, we would expect those to come down, but while we’re building our cash buffer back up.

Kyle Peterson: Okay. I guess then, I guess, just as kind of a house, is there like a rough amount of the catch-up interest that has benefited this quarter or anything? Any color you guys can give?

Kelly Tuminelli: Sure. In terms of the catch-up interest, it was roughly $3 million this quarter. So that was the amount that I would kind of consider unusual. Our balances are a little bit higher right now as well before we distribute some of those to our clients as well.

Operator: The next question comes from Andrew Polkowitz from JPMorgan.

Andrew Polkowitz: Before I ask my question, Kelly, I just wanted to congratulate you on a great tenure.

Kelly Tuminelli: Thanks, Andrew. I appreciate it.

Andrew Polkowitz: Of course. First question from me. I wanted to ask if you could provide an update on what you’re seeing on the ASO offering? It sounds like interest is tracking a little bit better than expected there, so figured I’d start there. And maybe as a quick follow-up to that question. Is there a different competitive set that you’re kind of competing against at this stage for ASO or is it really just kind of converting existing HIS at this point?

Michael Simonds: Great question. And we are. So I think we made the decision to exit the SaaS-only business because we really do feel like, competitively, our advantage is the combination of really strong technology and outstanding colleague support. And so we sort of made a set of assumptions around the rate at which the ideal profile of customers that are currently sitting on the SaaS-only product would buy-up. And we’ve done pretty considerably better than we would have thought, which was really encouraging. And then the second piece, Andrew, is of late here in the last quarter or so, we’ve seen organic new sales coming in and our forecast coming up on that front as well. So this is sort of a long-term bet for us, and I think will be a meaningful contributor to our longer-term growth.

And I think partly, it’s because to your kind of what’s inferred in your question, we’ve got clients on the PEO side and their needs change over time. And so they may want to unbundle certain parts of that offering, and ASO can make a lot of sense for them. I think the competitive set is probably a little bit of a Venn diagram. It overlaps in certain respects with some of the traditional competitors we have on the PEO side. I think we’re also seeing a lot of success in a much more fragmented ASO and much more sort of locally delivered ASO market where kind of having the depth of expertise and then sort of the strength of technology platform on a national scale, I think, sets us up well against that sort of local fragmented customer or competitor base.

Andrew Polkowitz: Got it. That’s helpful. And maybe for my follow-up question, I’ll just ask around the guidance. So very clear that revenue kind of pointing from the midpoint EPS. ICR on the little bit to the stronger end of the range. I just wanted to ask the question, is there anything we should consider like what the unknowns are that would point to the higher or lower end of the range? Understanding there’s only about 2 months left in the quarter, but still on January 1 selling season is sort of in-flight right now. So just wanted to ask kind of the range of outcomes embedded there.

Kelly Tuminelli: Good question, Andrew. And we have tried to pivot to annual guidance just to make sure that we’re really focusing on the core direction of the business, et cetera. We’re not expecting anything unusual at this point in the fourth quarter. we pointed towards the top end of the EPS range overall. And that was also helped by capital management throughout the year 2 and partly through share repurchase. But ICR, obviously, will have some minor level of fluctuation that will impact EPS in a little bit more disproportional way. But that would be the largest winner. I think we’ve got a pretty good eye on both new sales and retention from a volume perspective. So I really wouldn’t point anything out of the normal seasonal impact.

Operator: The next question comes from David Grossman at Stifel.

David Grossman: I just had 2 really quick questions. One is on the CIE commentary. Is growth, would you say, improving year-over-year? Is that less negative versus growth? I just wanted to clarify and make sure I’m understanding that correctly. And then secondly, as I look into 2026, if we remain in a stable environment, and we know that we have lower attrition, the gap in pricing is improving and CIE is improving, is there any reason to think that in a stable environment, WSEs won’t grow next year?

Kelly Tuminelli: David, let me take the CIE question, and then I’ll pass it over to Mike to take overall growth questions about next year. Regarding CIE, I did make the comment earlier on Jared’s question around less layoffs. CIE, we expect to be really low single-digit positive for the year on a net basis. Just when you peel apart — or pull up the covers, you do see that while hiring has been pretty stable at a low level, we are seeing just less layoffs. So net-net, when those two net out, it’s a small single-digit positive, but about 0.5 point better than last year.

Michael Simonds: And then on the second question around getting to growth in 2026, I have to take one step back, David, and say, we laid out a series of objectives, a medium-term strategy. Two component parts of that, let’s get revenue growth going. Certainly, volume growth would be a sort of component part on that side and then get the EBITDA margin improved. In aggregate, we’re very much on track, maybe tracking a little bit favorable. I’d say within that, we’re probably a tick or two stronger, quicker to the margin improvement and maybe a tick or two slower to sort of the outlook on revenue growth. I think that affords us the ability to do a little bit of rebalancing here in the short term as we kind of head into 2026. So I would stop sort of predicting kind of volume growth or WSE growth, but I would say just because CIE is going to be a little bit of a wildcard, but I do feel like getting past January 1, our last catch-up renewal, as we work through 2026, being on track for total revenue growth to reemerge.

We certainly are feeling bullish on that prospect. I hope that’s helpful.

David Grossman: Right. And then, I’m sorry if I missed this, if you mentioned this earlier, however, are you seeing — if the pricing discrepancy between you and the market is compressing, if you look sequentially throughout calendar ’25, has the attrition been diminishing on a relative basis each quarter by virtue of that price differential diminishing?

Michael Simonds: Yes. I think the way I would sort of actually think about that is we brought on, as you talked about and sort of laid out at the beginning of the year, a cohort of business over about 6 quarters. That tended to be skewed pretty heavily to Jan 1. So that sort of throws out — sort of throws off the retention patterns that doesn’t have that kind of sort of natural, what you might expect, improving. So I do think we’ll look to this getting through this January 1st renewal. I do think we’re going to remain above our historical average of 80% retention. I am looking forward to the sort of last catch-up being in the rearview mirror and getting out into 2026, back into that long-term insurance cost ratio range of 87% to 90%.

I think the team has done a very good job of sort of balancing retention, taking a couple of cycles for a cohort or two to kind of get back to where we need to be. I think that was the fair and balanced things to do for these small businesses. But yes, in general, I’d say, the end is in sight from what we can tell in terms of catching back up to where we need it to be.

David Grossman: And then just lastly, you gave a metric on the broker channel. I think about the percentage of RFPs that are coming in, is there anything that you can — I think it was double-digit growth in RFPs in that channel. Is there anything you can tell us about the character of the business that’s coming through the channel versus your existing growth?

Michael Simonds: Yes, it matches up very well from a vertical point of view. And I think as we’re sort of building out, we’re learning a lot about these relationships, and I think really good partners in the channel. They want to understand what kind of client is going to be the best fit for TriNet and their job is to match-make obviously. So I think that’s coming through really well. I think our proposition comes through really well. I’d say, on average, maybe the one difference we could point to is, the average size of prospect tends to be a little bit bigger, not dramatically so, but a little bit bigger.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Michael Simonds for any closing remarks.

Michael Simonds: Thanks, Drew, and thank you all for the early start this morning. Hopefully, you’re leaving with a better understanding of both our strengthening results and a really positive outlook. Here at TriNet — and I do want to thank Kelly one more time as we are wrapping up our last TriNet earnings call. Kelly, I appreciate everything you’ve done to help make TriNet the strong company that it is and all the support you provided for me in coming in and that you will provide in making this a really seamless and successful transition. I know you’ve already got a couple of Board seats and you’re looking to add to that portfolio over time, and I can’t imagine a better person to help guide a company. So thank you, Kelly. Much appreciated. And with that, operator, that concludes our call.

Kelly Tuminelli: Thank you.

Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.