TriNet Group (NYSE:TNET) executives said the company closed a “challenging” 2025 for small and medium-sized businesses (SMBs) with results at the top end of earnings guidance and higher free cash flow, while continuing to grapple with elevated medical cost inflation, muted hiring, and the impact of health fee repricing on retention.
On the company’s fourth-quarter 2025 earnings call, President and CEO Mike Simonds and new Chief Financial Officer Mala Murthy outlined progress on pricing discipline, operating expense reductions, and go-to-market investments that management expects to support improving sales momentum and retention through 2026.
Management frames 2025 as a year of pricing and operational reset
Simonds also emphasized investments made during 2025 in client service, go-to-market execution, and operational efficiency. He said TriNet exited 2025 with operating expenses down 7% year over year and expects further improvement in 2026, while continuing to invest in growth initiatives.
Revenue declines, WSE pressure, and retention drop tied to health fee increases
Murthy said total revenue declined 2% year over year in the fourth quarter and fell 1% for the full year, in line with guidance. She attributed the year’s performance to pricing gains in Insurance and Professional Services revenue that were offset by lower worksite employee (WSE) volumes.
TriNet ended 2025 with approximately 323,000 total WSEs, down 10% year over year, including 294,000 co-employed WSEs, down 11%. Retention fell to roughly 80%, down about five points from the prior year, with pricing “cited most often as the reason for leaving.” Murthy said the company’s “final outsized repricing” was delivered on Jan. 1, and management expects retention to improve as the year progresses.
Client hiring remained weak. Murthy said the company finished 2025 with a client employment (CIE) growth rate in the low single digits, below historical averages for a second consecutive year, with continued weakness in technology, professional services, and “Main Street” verticals. She added that gross layoffs have declined, but hiring “just hasn’t returned.”
Insurance results and cost ratio: improvement, but trends remain elevated
Insurance Services revenue declined 1% in the fourth quarter and was flat for the full year. Murthy said Insurance Services revenue per average co-employed WSE rose 9% in 2025 as TriNet passed through average health fee increases of more than 9%.
Insurance costs declined 2% year over year in the fourth quarter primarily due to lower volumes, while full-year insurance costs increased 1% as medical cost inflation outpaced the decline in WSEs. The fourth-quarter insurance cost ratio (ICR) was 94%, a 0.6-point improvement versus the prior year, and full-year 2025 ICR was about 90.8%, in line with guidance.
Looking to 2026, Murthy guided to a combined insurance cost ratio range of 90.75% to 89.25%, noting the company tightened its range by 50 basis points, which she said reflects improved actuarial capabilities and more stable cost trends. The guidance assumes medical cost growth between high single- and low double-digit rates, similar to 2025. She also called out pharmaceutical inflation as a headwind, citing expected low double-digit growth driven by GLP-1 usage, specialty drug utilization, and elevated cancer treatment costs.
ASO growth, sales investments, and broker channel seen as key levers in 2026
Executives highlighted Administrative Services Only (ASO) as a growing part of TriNet’s offering. Simonds said after discontinuing the company’s SaaS-only HRIS platform at the start of 2025, conversion rates to ASO exceeded expectations. TriNet ended the year with more than 39,000 ASO users and average per-employee-per-month pricing of about $50. Murthy said Professional Services revenue declined 7% in the fourth quarter and 6% for the year, with performance shaped by lower co-employed WSEs, low single-digit pricing increases, strong ASO growth, and headwinds from the HRIS wind-down and the discontinuation of a technology fee that represented a $22 million headwind.
On the call, Simonds said January sales were “up nicely” and that health brokers contributed disproportionately to January sales growth and the near-term pipeline. He said TriNet entered 2026 with four national broker partners and expects to add more over time, alongside improvements to quoting, service, technology, and partner incentives.
TriNet also described investments in its salesforce. Simonds said the company entered 2026 with double-digit growth in tenured sales reps (more than four years of experience) and launched an “Ascend” program in 2025 to build a longer-term pipeline of talent, with a planned expansion to six regional hubs. He said the combination of new reps and growth in tenured reps is expected to drive nearly a 20% expansion in selling capacity later in 2026.
Separately, Simonds said TriNet is simplifying its PEO health plan offering through “benefit bundles” and is preparing to launch “TriNet Assistant,” an AI-powered HR tool intended to provide immediate answers across HR topics. He also said the company expects to announce new platform capabilities in international employment, contractor management, IT provisioning and security, and leave of absence.
2025 profitability, cash flow, and shareholder returns; 2026 guidance issued
Murthy reported a GAAP loss per share of $0.01 in the fourth quarter and GAAP earnings per diluted share of $3.20 for the full year. Adjusted earnings per diluted share were $0.46 in the quarter and $4.73 for 2025, which management said was at the top end of guidance. Adjusted EBITDA was $57 million in the fourth quarter and $425 million for the year, representing an adjusted EBITDA margin of 8.5%.
Cash generation improved. The company posted $234 million in free cash flow in 2025, up 16% year over year, helped by working capital improvements. Free cash flow conversion was 55% compared with 41% in 2024, which Murthy said moved TriNet closer to a medium-term target range of 60% to 65%.
TriNet returned $235 million to shareholders in 2025 through dividends and share repurchases. Murthy said the company paid $1.075 per share in dividends for the year and repurchased about 2.8 million shares for $182 million. TriNet also paid off the remaining $90 million balance on its revolving credit facility and ended the year with a debt-to-adjusted EBITDA ratio of 2.1x, slightly above its targeted 1.5x to 2x range.
For 2026, management guided to:
- Total revenue: $4.75 billion to $4.9 billion
- Professional Services revenue: approximately $625 million to $645 million
- Combined insurance cost ratio: 90.75% to 89.25%
- Adjusted EBITDA margin: 7.5% to 8.7%
- GAAP EPS: $2.15 to $3.05
- Adjusted EPS: $3.70 to $4.70
Murthy said the company expects a $25 million to $30 million headwind to interest income versus 2025, reflecting lower interest rates and lower cash balances as certain tax refunds decline, with timing uncertainty around distributions.
On retention and volumes, executives said they expect elevated attrition in the first quarter due to the Jan. 1 renewal cycle, followed by improvement as health fee increases moderate beginning with April 1 renewals. Simonds noted that, for April 1 renewals, the percentage of clients receiving health fee increases above 30% declined by more than half compared with Jan. 1 renewals, which he characterized as a move toward a more normalized distribution.
The board also authorized an increase to the share repurchase program, bringing total authorization available to $400 million.
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.
