TRINET GROUP, INC. (TNET)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Overview

TriNet is a leading provider of HR solutions for SMBs. We offer a comprehensive suite of technology-enabled services through our PEO and ASO models including human capital expertise, employee benefits such as health insurance and retirement plans, payroll and payroll tax administration, risk mitigation, and compliance consulting.

We deliver a comprehensive suite of services that help our clients administer and manage various HR-related needs and functions, such as compensation, benefits, payroll processing, tax credit support, employee data, health insurance, workers' compensation, EPLI and other employment risk mitigation programs, employee performance management and training, on-boarding and off-boarding, and other transactional HR needs using our technology platform and benefits and compliance expertise.

We deliver our services primarily through our PEO services, which comprise our most complete HCM solution within our co-employment model.

In addition, our ASO services, which include our “HR Plus” product, consist of a SaaS solution with a significant service component, including payroll processing, benefits management, HR administration and compliance management to provide HCM solutions that our clients can tailor dynamically over time based on their specific needs. Unlike our PEO services, ASO services do not include co-employment.

Operational Highlights

Our consolidated results for the first half of 2026 reflect our continuing efforts to enhance our client experience, improve our sales performance, and manage client attrition, through product development and investments in our platform, as well as operational and process improvements.

So far in 2026, we:

•continued to execute on our medium-term strategy, reflecting significant progress in our efforts to reset the rates of our health benefits services,

•launched our new AI tool, TriNet Assistant, enabling customers to ask and receive answers to HR questions, with corresponding privacy and security safeguards and controls, by directly accessing TriNet’s HR knowledge library,

•through initiative with key partners, launched tools to assist our clients with IT automation, global workforce management and retirement plan connectivity to TriNet’s platform,

•completed the purchase of Cocoon, a leading provider of leave management technology that we are integrating into TriNet’s platform.

•made enhancements to our ASO services, including new tools to enable benefits administration and automated support for common employee requests,

•continued to invest in our sales resources, including expanding our partnership with brokers,

•continued to demonstrate disciplined expense management while making investments into our growth and efficiency efforts, and

•paid common stock dividends of $0.275 per share in January and $0.29 per share in April and July.

Performance Highlights

Our results for the quarter ended June 30, 2026 when compared to the same period of 2025, are noted below:

Q2 2026

Our total revenue decreased in the second quarter of 2026, compared to the same period in 2025, primarily driven by lower co-employed Average WSEs partially offset by higher rates charged for our services.

During the second quarter of 2026, our Average WSEs decreased by 11% and Total WSEs decreased by 12% compared to the same period in 2025, primarily due to WSE decreases in our Technology, Professional Services, and Main Street verticals, which were partially attributable to repricing of our health benefits services.

Our results are highly influenced by health care cost and utilization trends. Our ICR in the second quarter of 2026 decreased compared to the same period in 2025, primarily driven by lower claims development and one time recovery of costs of $21 million from prior years. It also reflects the cumulative results of our repricing efforts over the past year to align our insurance services rates with the current insurance cost trend.

Lower insurance costs, partially offset by lower revenue, resulted in increases of net income and Adjusted Net Income of 43% and 31%, respectively, in the second quarter of 2026, as compared to the same period in 2025.

YTD 2026

Results of Operations

The following table summarizes our results of operations for the second quarter ended June 30, 2026, when compared to the same period of 2025. For details of the critical accounting judgments and estimates that could affect our Results of Operations, see the Critical Accounting Judgments and Estimates section within the MD&A in Item 7 of our 2025 Form 10-K.

(1)    Refer to Non-GAAP measures definitions and reconciliations to the nearest GAAP measures under the heading "Non-GAAP Financial Measures".

The following table summarizes our balance sheet data as of June 30, 2026 compared to December 31, 2025.

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with GAAP, we monitor other non-GAAP financial measures that we use to manage our business, to make planning decisions, to allocate resources and to use as performance measures in our executive compensation plan. These key financial measures provide an additional view of our operational performance over the long-term and provide information that we use to maintain and grow our business.

The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation from, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

(1)    Non-GAAP effective tax rate is 25.5% and 25% of 2026 and 2025, respectively, which excludes the income tax impact from stock-based compensation, chang

[Excerpt truncated for page length; source filing is linked above.]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Operational Highlights

Our consolidated results for 2025 reflect our continuing efforts to serve our clients, attract new clients and invest in our platform.

During 2025 we:

•made progress on our medium-term strategy focusing our business on our core value proposition, improving the efficiency and effectiveness of our operations, which has helped us realize all time high net promoter scores,

•continued to grow our ASO services product and completed the sale of TriNet Clarus R+D,

•achieved significant repricing of our insurance services rates in light of rising insurance costs,

•made progress in growing our sales force and broker channel partnerships,

•demonstrated disciplined expense management in line with our expectations,

•opened our new corporate center in Atlanta and made significant progress building out our India operations, and

•paid common stock dividends of $0.25 per share in January and $0.275 per share in April, July, and October. Together with common stock repurchases of $182 million, we returned $235 million to stockholders.

Performance Highlights

Our results for 2025 when compared to 2024 are noted below:

Our total revenues decreased 1%, primarily driven by lower co-employed Average WSEs partially offset by higher rates charged for our services. Average WSEs and Total WSEs decreased 5% and 10%, respectively, compared to the same period in 2024, primarily due to WSE decreases in our Technology, Professional Services, and Main Street verticals, which were partially attributable to repricing of our health benefits services.

Our results are highly influenced by health care cost and utilization trends. Our ICR was 1 percent higher compared to the same period in 2024, driven by insurance costs outpacing the growth in insurance services revenues.

Higher insurance costs and lower revenues, resulted in decreases of net income and Adjusted Net income of 10% and 14%, respectively, as compared to the same period in 2024.

Results of Operations

The following table summarizes our results of operations for the three years ended December 31, 2025, 2024 and 2023. For details of the critical accounting judgments and estimates that could affect the Results of Operations, see the Critical Accounting Judgments and Estimates section within MD&A.

(1)    Refer to Non-GAAP measures definitions and reconciliations from GAAP measures under the heading "Non-GAAP Financial Measures".

The following table summarizes our balance sheet data as of December 31, 2025, 2024 and 2023.

A discussion regarding our financial condition and results of operations for 2024 compared to 2023 can be found under Part II, Item 7. Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 13, 2025.

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with GAAP, we monitor other non-GAAP financial measures that we use to manage our business, to make planning decisions, to allocate resources and to use as performance measures in our executive compensation plan. These key financial measures provide an additional view of our operational performance over the long-term and provide information that we use to maintain and grow our business. The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation from, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.

(1)     Non-GAAP effective tax rate is 25.0% for 2025, and 25.6% for 2024, which excludes the income tax impact from stock-based compensation, changes in uncertain tax positions, and nonrecurring benefits or expenses from federal legislative changes.

Reconciliation of GAAP to Non-GAAP Measures

The table below presents a reconciliation of Net income to Adjusted EBITDA:

The table below presents a reconciliation of Net income to Adjusted Net Income:

Operating Metrics

Worksite Employees (WSE)

Average WSE change is a volume measure we use to monitor the performance of our PEO business. Our PEO clients generally change their payroll service providers at the beginning of the payroll tax and benefits enrollment year; as a result, we have historically experienced our highest volumes of new PEO clients joining and existing clients terminating in the month of January. PEO client attrition, new PEO client additions and changes in employment levels within our installed PEO client base all impact our Average WSEs and Total WSEs as we move through a calendar year.

We support WSEs from the date on which their co-employment with TriNet commences through the end of their co-employment with TriNet and also after their co-employment period. We define WSEs to include co-employees and other individuals receiving PEO services, such as individuals who receive COBRA benefits or are subj

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]