TriNet (TNET, Financial) has reported its financial results for the first quarter of 2025, showing a revenue increase to $1.292 billion, compared to $1.282 billion in the same period the previous year. This performance aligns with the company's expectations for the year as outlined in their full-year guidance.
According to Mike Simonds, the company's President and CEO, this strong financial start highlights the resilience of TriNet's business model. As the company continues to operate in a difficult economic climate, it successfully supported its clients in navigating these challenges.
Simonds also noted that TriNet is actively executing a detailed strategy to enhance its market position. This includes improving customer care, revising its benefits offerings, and investing in initiatives aimed at growth and operational efficiency. He expressed confidence in the company's ability to capture a larger market share over the medium term.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for Trinet Group Inc (TNET, Financial) is $84.67 with a high estimate of $97.00 and a low estimate of $77.00. The average target implies an upside of 9.13% from the current price of $77.58. More detailed estimate data can be found on the Trinet Group Inc (TNET) Forecast page.
Based on the consensus recommendation from 6 brokerage firms, Trinet Group Inc's (TNET, Financial) average brokerage recommendation is currently 2.5, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Trinet Group Inc (TNET, Financial) in one year is $137.34, suggesting a upside of 77.03% from the current price of $77.58. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Trinet Group Inc (TNET) Summary page.
TNET Key Business Developments
Release Date: February 13, 2025
- Total Revenue Growth: 1% year-over-year in Q4 and for the full year.
- Worksite Employees (WSEs): Approximately 361,000 total WSEs, up 4%; 330,000 co-employed WSEs, down 2%.
- Professional Services Revenue: Declined 4% in Q4; increased 1% for the year.
- PEO Revenue Growth: 3% for the year.
- Insurance Revenue Growth: 2% in Q4; 1% for the year.
- Insurance Costs: Grew 12% in Q4; 8% for the year.
- Insurance Cost Ratio (ICR): 95% in Q4; approximately 90% for the year.
- Restructuring Charge: $49 million related to exiting HRIS business.
- Operating Expenses: Down 1% in Q4; down 2% for the full year, excluding restructuring charge.
- GAAP Net Loss Per Share: $0.46 in Q4.
- Full Year GAAP Earnings Per Diluted Share: $3.43.
- Adjusted Earnings Per Diluted Share: $0.44 in Q4; $5.32 for the year.
- Net Cash Provided by Operating Activities: $279 million for the year.
- Free Cash Flow: $201 million for the year.
- Adjusted EBITDA: $60 million in Q4; $485 million for the year.
- Share Repurchases: $219 million deployed to shareholders.
- Debt to Adjusted EBITDA Ratio: 2 times at year-end.
- 2025 Revenue Guidance: $4.9 billion to $5.1 billion.
- 2025 Adjusted EBITDA Margin Guidance: 7% to 9%.
- 2025 GAAP Earnings Per Diluted Share Guidance: $1.90 to $3.40.
- 2025 Adjusted Earnings Per Diluted Share Guidance: $3.25 to $4.75.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Trinet Group Inc (TNET, Financial) achieved a 1% year-over-year revenue growth in Q4 and for the full year, aligning with their guidance.
- The company reported record retention rates for 2024, even amidst higher renewal rates.
- Trinet Group Inc (TNET) is exiting the HRIS-only business to focus on its core PEO services, which is expected to streamline operations and improve margins.
- The company has a strong cash generation capability, with $279 million in net cash provided by operating activities and $201 million in free cash flow for 2024.
- Trinet Group Inc (TNET) plans to continue investing in growth initiatives, funding dividends, and share repurchases, maintaining a strong capital return strategy.
Negative Points
- Trinet Group Inc (TNET) faces challenges with low customer hiring and elevated healthcare costs, impacting new sales and attrition rates.
- The company anticipates a modest increase in attrition due to healthcare price increases, which could dampen new sales.
- Trinet Group Inc (TNET) reported a GAAP net loss per share of $0.46 in Q4, impacted by restructuring charges.
- The company expects a contraction in adjusted EBITDA margin in 2025 due to elevated insurance cost ratios and HRIS business wind-down expenses.
- Trinet Group Inc (TNET) anticipates a slight volume decrease in 2025, driven by prudent pricing approaches and increased attrition.
