SAN LEANDRO, Calif. — May 5, 2015 — TriNet Group, Inc. (NYSE: TNET), a leading provider of a comprehensive human resources solution for small to medium-sized businesses, today announced financial results for the first quarter ended March 31, 2015.

“During the first quarter we continued to experience robust demand for our unique HR solutions,” said Burton M. Goldfield, TriNet’s President and CEO. “We are executing our differentiated vertical strategy by leveraging our bundled products and a sales force organized around target vertical markets. For example, we recently launched TriNet Life Sciences, a cloud-based bundled HR solution tailored to the specific HR needs of the life sciences market. With our vertical strategy in place, we believe we are well positioned to drive growth within this large addressable market.”

Results for the first quarter of 2015 reflect a net increase of 46,873 WSEs since March 31, 2014 representing 19% growth, as TriNet continued to utilize its growing salesforce to increase penetration of targeted customer verticals. TriNet’s total revenues for the first quarter of 2015 increased 23% from the first quarter of 2014 to $625.6 million, while Net Service Revenues increased 11% from the first quarter of 2014 to $142.4 million. Net Service Revenues consisted of professional service revenues of $97.0 million and Net Insurance Service Revenues of $45.4 million. Net Insurance Service Revenues consisted of insurance service revenues of $528.6 million, less insurance costs of $483.2 million. Professional service revenues for the first quarter of 2015 increased 17%, and Net Insurance Service Revenues were relatively flat, compared to the first quarter of 2014. TriNet ended the first quarter with 408 Total Sales Representatives, up from 385 at the end of the fourth quarter of 2014.

At March 31, 2015, TriNet had cash and equivalents of $104.4 million and total debt of $514.7 million.

TriNet will host a conference call at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its quarterly results and the outlook for the full 2015 fiscal year. TriNet encourages participants to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. To pre-register, go to: http://dpregister.com/1064546. For those who would like to join the call but have not pre-registered, they can do so by dialing +1 (412) 317-5413 and requesting the “TriNet Conference Call.” The live webcast of the conference call can be accessed on the Investor Relations section of TriNet’s website at http://investor.trinet.com. A replay of the webcast will be available on this site for approximately one year. A telephonic replay will be available for one week following the conference call at +1 (412) 317-0088 conference ID: 10064546.

TriNet is a leading provider of a comprehensive human resources solution for small to medium-sized businesses, or SMBs. We enhance business productivity by enabling our clients to outsource their human resources, or HR, function to one strategic partner and allowing them to focus on operating and growing their core businesses. Our HR solution includes services such as payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance. Our services are delivered by our expert team of HR professionals and enabled by our proprietary, cloud-based technology platform, which allows our clients and their employees to efficiently conduct their HR transactions anytime and anywhere. For more information, please visit http://www.trinet.com.

Reconciliations of non-GAAP financial measures to TriNet’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled “Non-GAAP Financial Measures.”

This press release contains, and statements made during the above referenced conference call will contain, forward-looking statements including, among other things, TriNet’s expectations regarding the growth of its salesforce and its customer base; its ability to generate returns through its vertical sales strategy and penetration of the SMB market; and future total revenues, Net Service Revenues, professional service revenues, insurance service revenues, insurance costs, Net Insurance Service Revenues, expenses, net income, Adjusted Net Income and Adjusted EBITDA. These statements are not guarantees of future performance, but are based on management’s expectations as of the date hereof and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: risks associated with the market acceptance of outsourcing the HR function, and the anticipated benefits associated with the use of a bundled HR solution; our ability to continue to expand our direct sales force and the efficacy of our sales and marketing efforts; our ability to gain new clients, and our clients’ ability to grow and gain more employees; our ability to effectively acquire and integrate new businesses; the effects of seasonal trends on our results of operations; the unpredictable nature of our costs and operating expenses, in particular our insurance costs; changes to and our ability to comply with laws and regulations, including both those applicable to the co-employment relationship as well as those applicable to our clients’ businesses and their employees; the implementation of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act, and its application to the co-employer relationship; our ability to effectively manage our growth; the effects of increased competition and our ability to compete effectively; and our ability to comply with the restrictions of our credit facility and meet our debt obligations.

Further information on risks that could affect TriNet’s results is included in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, filed with the Commission on March 30, 2015, and our Quarterly Report on Form 10-Q expected to be filed with the Commission on May 7, 2015, which could cause actual results to vary from expectations. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

TriNet, Ambitions Realized and the TriNet logo are registered trademarks of TriNet.

	Three Months Ended March 31,
		2015			2014
Professional service revenues	$	97,016		$	82,875
Insurance service revenues		528,562			426,037
Total revenues		625,578			508,912
Costs and operating expenses:
Insurance costs		483,203			381,157
Cost of providing services (exclusive of depreciation and amortization of intangible assets)		36,370			33,643
Sales and marketing		37,624			31,837
General and administrative		15,464			14,337
Systems development and programming costs		7,225			5,894
Amortization of intangible assets		11,217			13,549
Depreciation		3,434			3,218
Total costs and operating expenses		594,537			483,635
Operating income		31,041			25,277
Other income (expense):
Interest expense and bank fees		(5,204	)		(21,852	)
Other, net		450			103
Income before provision for income taxes		26,287			3,528
Provision for income taxes		10,476			1,988
Net income	$	15,811		$	1,540
Net income per share:
Basic	$	0.23		$	0.03
Diluted	$	0.22		$	0.03
Weighted average shares:
Basic		70,198,184			16,775,513
Diluted		73,350,219			19,397,777

	March 31,			December 31,
	2015			2014
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	104,401		$	134,341
Restricted cash		14,546			14,543
Prepaid income taxes		10,411			26,711
Prepaid expenses		10,001			9,336
Deferred loan costs and other current assets		4,570			4,271
Worksite employee related assets		922,619			1,635,136
Total current assets		1,066,548			1,824,338
Workers compensation receivable		54,130			31,905
Restricted cash and investments		73,964			69,447
Property and equipment, net		33,769			32,298
Goodwill		288,857			288,857
Other intangible assets, net		70,501			81,718
Deferred income taxes		21,586			7,184
Deferred loan costs and other assets		10,860			12,017
Total assets	$	1,620,215		$	2,347,764
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable	$	11,182		$	12,273
Accrued corporate wages		27,415			29,179
Deferred income taxes		65,713			65,713
Current portion of notes payable and borrowings under capital leases		20,305			20,738
Other current liabilities		10,784			10,303
Worksite employee related liabilities		915,985			1,630,555
Total current liabilities		1,051,384			1,768,761
Notes payable and borrowings under capital leases, less current portion		494,533			524,412
Workers compensation liabilities		82,748			75,448
Other liabilities		6,649			4,902
Total liabilities		1,635,314			2,373,523
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $.000025 per share stated value; 20,000,000 shares authorized; no shares issued and outstanding at March 31, 2015 and December 31, 2014		—			—
Common stock, $.000025 per share stated value; 750,000,000 shares authorized; 70,076,978 and 69,811,326 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively		462,655			442,682
Accumulated deficit		(477,341	)		(468,127	)
Accumulated other comprehensive loss		(413	)		(314	)
Total stockholders’ deficit		(15,099	)		(25,759	)
Total liabilities and stockholders’ deficit	$	1,620,215		$	2,347,764

	Three Months Ended March 31,
		2015			2014
Operating activities
Net income	$	15,811		$	1,540
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,741			22,028
Deferred income taxes		(14,402	)		1,412
Stock-based compensation		3,920			2,147
Excess tax benefit from equity incentive plan activity		(12,853	)		(1,753	)
Accretion of workers compensation and leases fair value adjustment		(88	)		(347	)
Changes in operating assets and liabilities:
Restricted cash		(4,520	)		(3,961	)
Prepaid expenses and other current assets		(2,181	)		(1,411	)
Workers compensation receivables		(22,100	)		3,379
Other assets		1,143			4,033
Accounts payable		(1,352	)		2,078
Income tax payable/receivable		29,153			(3,789	)
Other current liabilities		(211	)		1,532
Other liabilities		9,110			4,869
Worksite employee related assets		712,517			108,637
Worksite employee related liabilities		(714,570	)		(110,057	)
Net cash provided by operating activities		14,118			30,337
Investing activities
Purchase of debt securities		–			(1,000	)
Purchase of property and equipment		(4,644	)		(5,064	)
Net cash used in investing activities		(4,644	)		(6,064	)
Financing activities
Proceeds from issuance of common stock		–			218,859
Proceeds from issuance of common stock on exercised options		3,199			494
Excess tax benefit from equity incentive plan activity		12,853			1,753
Repayment of notes payable		(30,125	)		(216,575	)
Repayments under capital leases		(180	)		(66	)
Repurchase of common stock		(25,025	)		(451	)
Net cash provided by (used in) financing activities		(39,278	)		4,014
Effect of exchange rate changes on cash and cash equivalents		(136	)		(42	)
Net increase (decrease) in cash and cash equivalents		(29,940	)		28,245
Cash and cash equivalents at beginning of period		134,341			94,356
Cash and cash equivalents at end of period	$	104,401		$	122,601

We regularly review certain key operating metrics to evaluate growth trends, measure our performance and make strategic decisions. Our key operating metrics for the periods presented were as follows:

We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and, pro forma Adjusted Net Income per share – diluted to provide an additional view of our operational performance. Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted are financial measures that are not prepared in accordance with GAAP. We define Net Insurance Service Revenues as insurance service revenues less insurance costs, which include the premiums we pay to insurance carriers for the health and workers compensation insurance coverage provided to our clients and WSEs and the reimbursements we pay to the insurance carriers for claim payments within our insurance deductible layer. We define Net Service Revenues as the sum of professional service revenues and Net Insurance Service Revenues. We define Adjusted EBITDA as net income, excluding the effects of our income tax provision, interest expense, depreciation, amortization of intangible assets, and stock-based compensation. We define Adjusted Net Income as net income, excluding the effects of stock-based compensation, amortization of intangible assets, non-cash interest expense, debt prepayment premium and, the income tax effect of these pre-tax adjustments at our effective tax rate. For purposes of our non-GAAP financial presentation, as a result of a 2015 increase in New York City tax rates, we have adjusted the effective tax rate to 40.5% for the three months ended March 31, 2015, from 39.5% for the three months ended March 31, 2014. Each of these effective tax rates exclude income tax on non-deductible stock-based compensation and discrete items including the cumulative effect of state law changes. Non-cash interest expense represents amortization and write-off of our debt issuance costs. We define pro forma Adjusted Net Income per share – diluted as Adjusted Net Income per basic share adjusted to reflect our equity structure as if our initial public offering and associated conversion of preferred stock had occurred at the beginning of the period and all option exercises that occurred during the period occurred at the beginning of the period, and then giving effect to all remaining potential shares of common stock issuable upon exercise of options or settlement of restricted stock units, to the extent dilutive.

We believe that the use of Net Insurance Service Revenues provides useful information as it presents a measure of revenues from our provision of insurance services to our clients that eliminates the cost to us of that insurance. We believe that Net Service Revenues provides a useful measure of total revenues for the two main components of our revenues calculated on a consistent basis. We believe that the use of Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted provides additional period-to-period comparisons and analysis of trends in our business, as they exclude certain one-time and non-cash expenses. We believe that Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income, and pro forma Adjusted Net Income per share – diluted are useful for our stockholders and board of directors by helping them to identify trends in our business and understand how our management evaluates our business. We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted to monitor and evaluate our operating results and trends on an ongoing basis and internally for operating, budgeting and financial planning purposes, in addition to allocating our resources to enhance the financial performance of our business and evaluating the effectiveness of our business strategies. We also use Net Service Revenues and Adjusted EBITDA in determining the incentive compensation for management.

Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. As non-GAAP measures, Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In particular:

• Net Insurance Service Revenues and Net Service Revenues are reduced by the insurance costs that we pay to the insurance carriers;

• Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

• Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;

• Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

• Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs;

• Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted do not reflect the non-cash component of employee compensation;

• Although depreciation and amortization of intangible assets are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

• Other companies in our industry may calculate these measures or similar measures differently than we do, limiting their usefulness as a comparative measure.

Because of these limitations, you should consider Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and pro forma Adjusted Net Income per share – diluted alongside other financial performance measures, including total revenues, net income and our other financial results presented in accordance with GAAP.

The table below sets forth a reconciliation of GAAP insurance service revenues to Net Insurance Service Revenues:

	Three months ended				Change
	March 31,				2015 vs. 2014
	2015		2014		$		%
	(in thousands, except percentages)
Insurance service revenues	$	528,562	$	426,037	$	102,525		24%
Less: Insurance costs		483,203		381,157		102,046		27%
Net Insurance Service Revenues	$	45,359	$	44,880	$	479		1%

The table below sets forth a reconciliation of GAAP total revenues to Net Service Revenues:

	Three months ended				Change
	March 31,				2015 vs. 2014
	2015		2014		$		%
	(in thousands, except percentages)
Total revenues	$	625,578	$	508,912	$	116,666		23%
Less: Insurance costs		483,203		381,157		102,046		27%
Net Service Revenues	$	142,375	$	127,755	$	14,620		11%

The table below sets forth a reconciliation of GAAP net income to Adjusted EBITDA:


	Three Months Ended March 31,
	2015		2014
	(in thousands)
Net income	$	15,811	$	1,540
Provision for income taxes		10,476		1,988
Stock-based compensation		3,920		2,147
Interest expense and bank fees		5,204		21,852
Depreciation		3,434		3,218
Amortization of intangible assets		11,217		13,549
Adjusted EBITDA	$	50,062	$	44,294

The table below sets forth a reconciliation of GAAP net income to Adjusted Net Income:


	Three Months Ended March 31,
	2015			2014
	(in thousands)
Net income	$	15,811		$	1,540
Effective income tax rate adjustment		(170	)		595
Stock-based compensation		3,920			2,147
Amortization of intangible assets		11,217			13,549
Non-cash interest expense		1,217			6,106
Debt prepayment premium		-			3,800
Income tax impact of pre-tax adjustments		(6,623	)		(10,113	)
Adjusted Net Income	$	25,372		$	17,624

The table below sets forth a reconciliation of GAAP weighted average shares of common stock – basic to pro forma weighted average shares of common stock - diluted and Adjusted Net Income per share – diluted as if the equity structure had been in place at the beginning of the periods presented:


	Three Months Ended March 31,
	2015			2014
	(in thousands, except per share data)
GAAP Weighted average shares of common stock - basic		70,198			16,776
Effect of IPO, conversion of preferred stock and exercise of stock options during the period included above		(387	)		(1,516	)
Adjustments as if the equity structure had occurred at the beginning of the periods:
Conversion of preferred stock		-			38,066
Common stock issued in connection with IPO		-			15,000
Common stock issued in connection with stock option exercises, net of stock repurchases		265			641
Dilutive effect of outstanding stock options and restricted stock units		2,853			3,301
Pro forma weighted average shares of common stock - diluted		72,929			72,268

Adjusted Net Income	$	25,372		$	17,624
Pro forma adjusted net income per share - diluted	$	0.35		$	0.24


Contacts:
Investors:	Media:
Alex Bauer	Jock Breitwieser
TriNet	TriNet
Investorrelations@TriNet.com	Jock.Breitwieser@TriNet.com
(510) 875-7201	(510) 875-7250