TriNet Group (NYSE:TNET) reported second-quarter results that reflected improved insurance performance, stronger customer retention and continued investment in sales and service initiatives, prompting the company to raise its full-year earnings outlook.
Total revenue was $1.2 billion, down 5% from a year earlier, primarily reflecting lower worksite employee, or WSE, volumes. The company ended the quarter with about 300,000 total WSEs, down 12% year-over-year but flat sequentially. Co-employed WSEs totaled approximately 274,000, down 11% from the prior-year period.
Retention and Pricing Improvements
Simonds said TriNet’s health-fee pricing actions over the past 18 months enabled the company to renew customers at rates more closely aligned with market health-cost trends. The company said it saw a combination of improved insurance performance and significantly better customer retention in the second quarter.
Overall attrition improved 36% year-over-year. Attrition tied to health-fee pricing declined 58%, while attrition related to service declined 47%, according to Simonds. TriNet is seeking to achieve long-term retention rates several points higher than its historical level of roughly 80%.
The company’s second-quarter insurance cost ratio, or ICR, was 86%, improving four percentage points from a year earlier. Chief Financial Officer Mala Murthy said two points of that improvement came from favorable prior-year development, while the other two points resulted from a one-time recovery of insurance administrative costs previously expensed in an earlier decade.
Murthy said health-cost trends stabilized in the high single digits during the quarter and were slightly favorable to TriNet’s forecast. The company experienced fewer inpatient procedures than expected and lower-than-forecast pharmaceutical inflation, aided by adoption of biosimilars and stabilization in GLP-1 drug usage. However, she said the company does not view lower pharmaceutical cost inflation as a permanent trend because of the potential introduction of high-cost drugs.
TriNet expects its ICR to be higher in the second half than in the first half because of normal seasonal factors, including utilization patterns, deductibles being met and pooling-limit resets.
Sales Force and Broker Channel Initiatives
Sales ended the second quarter flat year-over-year, though Simonds said momentum improved sequentially as customer decision cycles that had lengthened in late March and April began to normalize. He said TriNet expects sales growth in the second half.
The company is retaining more experienced sales consultants, with the number of representatives with more than four years of experience rising 7% year-over-year. Productivity among those senior representatives increased 13% during the quarter, and they were, on average, five times more productive than first-year representatives.
TriNet’s Ascend sales-development program is also expanding. Its first class of more than 20 representatives is expected to enter production in the third quarter, while more than 100 new hires have joined the program nationally. The company expects to finish the year with approximately 20% more sales consultants than it had at the end of 2025.
The broker channel represented 32% of new sales at the end of the second quarter, while broker-generated requests for proposals increased 54% year-over-year. Simonds said TriNet sees the channel as an opportunity to expand distribution through national broker partnerships, although it remains more competitive than direct sales.
For the fall selling season, TriNet expanded its health-plan library across a wider range of price points and introduced artificial intelligence tools intended to match clients with bundled plan choices. In July, it also launched an enhanced health-plan pricing engine that management said is designed to improve proposal quality, speed and consistency.
AI, Client Service and Cocoon Integration
TriNet said its AI-powered TriNet Assistant, launched during the spring, has handled 50% of customer-initiated chat sessions so far. The tool addresses inquiries related to benefits, payroll and workforce management, and has reduced service-case volumes for employees, according to Simonds.
Management also highlighted the acquisition and integration of Cocoon, a leave-of-absence solution. The first customer cohort has migrated to the platform, while the second and third cohorts are expected to be completed by year-end. TriNet said the timing should position it to onboard new professional employer organization customers during the January enrollment period.
Professional services revenue totaled $159 million, down 8% year-over-year but ahead of the company’s forecast. Murthy attributed the outperformance to firm pricing, favorable reporting methodology for state tax-related revenue and revenue from Cocoon. Interest revenue fell 33% to $12 million, in line with expectations, due to lower cash balances associated with certain tax credits.
Raised 2026 Earnings Outlook
Second-quarter GAAP diluted earnings per share were $1.15, while adjusted diluted earnings per share were $1.55. Adjusted EBITDA was $128 million, representing a 10.9% margin. Net cash provided by operating activities was $88 million, and free cash flow increased 18% to $67 million.
TriNet returned $31 million to shareholders during the quarter through dividends and share repurchases. The company repurchased about 500,000 shares for $18 million and paid a quarterly dividend of $0.29 per share.
For 2026, TriNet maintained its total revenue guidance of $4.75 billion to $4.9 billion. It raised its professional services revenue outlook to $647 million to $663 million and improved its ICR outlook to a range of 88.5% to 89.5%.
- Adjusted EBITDA margin guidance was raised to 8.5% to 9%.
- GAAP diluted EPS guidance was set at $2.85 to $3.35.
- Adjusted diluted EPS guidance was raised to $4.50 to $5.10.
Murthy said the company plans to use improved first-half earnings to accelerate investments in distribution, benefits offerings and its service model, with AI incorporated across those initiatives.
About TriNet Group (NYSE:TNET)
TriNet Group, Inc is a leading professional employer organization (PEO) that offers integrated human capital management solutions to small and medium-size businesses. Through a bundled suite of services, TriNet manages payroll administration, employee benefits, workers’ compensation, risk mitigation and federal and state compliance. Its cloud-based platform provides clients with centralized access to HR tools, analytics and streamlined workforce management capabilities.
Founded in 1988 and headquartered in Dublin, California, TriNet has grown to support thousands of organizations across the United States.
