TriNet Raises Profit Outlook as Insurance Costs Fall
Adjusted EBITDA margin widened 2.4 percentage points to 10.9% despite lower revenue.
TriNet Group (TNET), a human-resources services provider, increased second-quarter adjusted diluted earnings 35% to $1.55 a share even as revenue fell 5%.
The revenue decline matched the first quarter’s contraction and deepened from 2% declines in each of the two preceding quarters. Average worksite employees fell to 297,615, down from about 300,000 in the first quarter and 324,000 in the fourth quarter of 2024.
Revenue totaled $1.178 billion, while net income rose 43% to $53 million and diluted earnings increased 50% to $1.15 a share. Profit remained below the seasonally stronger first quarter, when net income was $89 million and diluted earnings were $1.90 a share.
Lower insurance costs drove the earnings improvement. The insurance cost ratio declined to 86% from 90% a year earlier as costs fell 8% to $867 million, outpacing a roughly 4% decline in insurance-service revenue to $1.007 billion.
Revenue pressure extended across the business. Professional-service revenue fell 8% to $159 million, compared with a 10% decline in the first quarter, while interest income dropped to $12 million from $18 million. General and administrative expense rose to $56 million from $52 million, though sales and marketing expense and the cost of providing services declined.
Adjusted EBITDA rose 22% to $128 million. That was below the first quarter’s $186 million, but the margin remained above the 4.7% recorded in the fourth quarter of 2024.
TriNet now expects 2026 professional-service revenue of $647 million to $663 million, up from its previous range of $625 million to $645 million. Total-revenue guidance remains $4.75 billion to $4.90 billion, while adjusted EBITDA margin guidance rises to 8.5% to 9.0% from 7.5% to 8.7%.
The company now projects diluted earnings of $2.85 to $3.35 a share and adjusted diluted earnings of $4.50 to $5.10 a share. Its expected full-year insurance cost ratio improves to a range of 88.5% to 89.5%, while second-quarter free cash flow rose to $67 million from $57 million.