TNET Financial Analysis

Analysis Date: 1/24/2025

Business Model

TriNet generates revenue through professional service fees and insurance service revenues from providing HR solutions to small and medium-sized businesses

Revenue Sources

• Professional service revenues: $184M (15% of Q3 2024 revenue)
• Insurance service revenues: $1,053M (85% of Q3 2024 revenue)

Revenue Distribution by Channel

• PEO Services: Approximately 356,000 Worksite Employees (WSEs)
• HRIS Platform: Approximately 183,000 users

Income Statement Analysis

• Total revenues increased 1% year-over-year to $1.2B
• Professional service revenues remained flat at $184M
• Operating income decreased 50% to $58M due to higher insurance costs
• Net income declined 52% to $45M

Balance Sheet Analysis

• Total assets increased slightly by 1% to $3.73B
• Strong liquidity with $251M in cash and $195M in investments
• Total debt of $1.1B as of September 30, 2024

Cash Flow Analysis

• Operating cash flows declined significantly due to timing of payroll tax payments and other working capital changes
• Corporate operating cash flows were $213M for the first nine months

Capital Allocation

Company maintains balanced capital allocation with $251M cash, share repurchases of $155M YTD, and dividend payments of $25M YTD

Management Commentary

Q3 was aligned with expectations with stable second half outlook

Strong customer retention despite challenging environment

Higher healthcare costs adversely impacted profitability

Overall Sentiment: Cautiously optimistic while managing through near-term cost pressures

Recommendation

Rating: Hold

Reason for Rating: Balance of strong market position against near-term cost headwinds

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 1:42:56 PM