David Grossman: Thank you. Good morning. Mike, I know it’s still early. And as you think about the company’s growth strategy, I’m sure it’s multidimensional. However, when you think about the next, let’s just say, two-year time horizon, where do you see the greatest opportunity for growth? Is it — sales, headcount and productivity, is it channels? Do you entertain geographic expansion as a potential opportunity? And maybe you could just provide a little more insight into how you’re thinking about where you’re going to see the most opportunity here in the next 24 months?
Mike Simonds: Yes. Thanks, David. It’s good to hear from you. I appreciate the question. Can I answer with all of the above in that, we really are taking a thorough look at all those dimensions? And I suspect, as you said that we’re going to focus primarily on what are we doing well today that we can really push and be exceptional. And so when I think about things that are distinctive for TriNet, I think likely, it’s going to be how do we make those things even more distinctive. So the core PEO business and the increasing importance of benefits as a component of that and really doubling down and understanding how do we really help more SMBs solve for some of those problems. I think there’s potential there to continue to lever that piece of our offering in the market continue.
I think is a really good expansion in our distribution, both the direct sales team and how do we continue to drive retention. We saw four points better retention of our sales consultants. I think my experience is really good salespeople love to win and we’re winning in market. And so that creates a nice virtuous cycle for us with a differentiated offer. I think we are skewed towards certain parts of the U.S. I think there is opportunity for us to look at some geos where we can construct favorable benefits packages and build our brand in those markets and put the right sales and sales channels in place. So again, give me a little bit of time. We’re 10 weeks in. We have a really strong team focused on executing for our customers and looking out to say, how do we do this on a bigger spot.
I would just conclude and I mentioned it earlier, I really do see the opportunity to grow and grow profitably and then put that work — put that to work in terms of leveraging scale to drive quality and efficiency. So I would expect that to be one of the aspects of the plan as we pull it together is TriNet’s unique. We focus not on the entire market, we’re not trying to be a PEO HR provider for everyone. But for the ones we do, we really do want to stand out with that focus and with our proprietary technology and then take advantage of that to really drive quality and efficiency. And so see the scale benefits come through. So I recognize there’s not as much specificity as you might like, but we’ll look to keep people along over the coming quarters.
David Grossman: And just one quick follow-up to those comments. And then I think earlier you said leveraging your proprietary technology and sorry if I’m forgetting, but where are we on the journey of integrating everybody onto the kind of this unified platform? I’m sorry if I’ve forgotten, if you mentioned that.
Mike Simonds: No, really good progress. And with the Zenefits acquisition, we brought in some really, I think impressive tech that we’ve already begun to put to work. And we’re not doing a big cut over to a new platform. My experience is that those can be very challenging for customers and for us operationally. So we’re in effect pulling out functionality and then applying it into the core product and have seen some really good progress on that front. And while we’re on the topic of the HRIS business, it’s worth mentioning that we’ve got not only putting to work the technology but also the talent that comes from that space. We’re doing it having made some adjustments to the HRIS business, raised prices, captured expense synergies.
So now that business is really self-funded. So we’re getting the benefit of the tech and the talent in a really cost-efficient way. And then what’s the outlook for that business with growth, that’s part of what we’ll look at through the strategic review, but it’s a great set of technologies and talent to have in-house and in the portfolio and I think we’ll put into good use.
David Grossman: Great. Thank you for that. And just one quick one for you, Kelly. We — or maybe, Mike, maybe this is a question for you, but we haven’t really been in a kind of rising utilization rate for a while here. And I think, Kelly, you mentioned the timing of when you price different cohorts in the portfolio. So is there anything you want to highlight about what can be a derivative outcome when we go through that process? I don’t know if the take rate by vertical can slightly change when you start raising pricing, but maybe you could just refresh us on what to expect or some of the potential outcomes when you start repricing the book for a rising utilization environment?
Mike Simonds: Yes. Thanks, David. I’ll jump in and then Kelly, please add to it if you’ve got things to add. Yes. I think the key point being — there’s nothing different in what TriNet is seeing versus what we’re seeing in the data from our carrier partners more broadly when we benchmark it. If anything, I think we’ve been a little bit favorable over the last several quarters, inclusive of the first quarter to what we’re seeing in the U.S. market for small case commercial broadly. And that’s really important because to your question, as we make adjustments, both in new business and renewal pricing. We do not feel like we’ll be disadvantaged, because the trends that we have seen in our data are consistent, if not slightly favorable to the broader market.
So we’ve got to work through it, as Kelly talked about, the 10 months coming and one months coming. We don’t go into those with the expectation that that’s going to materially impact our conversion rates, our retention rates, for instance. And I think that’s because our offering is much bigger than just the health insurance pricing. And so when you’re showing up across HR compliance, payroll, payroll services, benefits beyond, frankly just the healthcare, insurance beyond just benefits, there’s a lot to that model, I think that will drive stickiness and new customer growth. And I do — I mentioned it before, but I really do think that if you look past the short-term and you look to the mid-term, long-term, cost inflation for healthcare for us and with our model, that’s a demand generator for us.
And so I do think that over time, it makes the demand for service like TriNet brings — bringing the scale that we can bring in the large employer resources into that SMB market, that’s a tailwind for us.
Kelly Tuminelli: Yes. And we really, David, haven’t seen a significant change in maybe a one-point difference in terms of enrollments, as a percentage of the base overall. So you do see some level of buy down behavior, like, people going for more high deductible plans and things like that as healthcare becomes a little bit more expensive, but we are working with our carrier partners to make sure that we’ve got the best offerings that hit their needs and we’re working with our clients to make sure that the funding strategies that they have also align with what they’re trying to deliver to their employees.
David Grossman: Great. Thank you very much. Good luck.
Mike Simonds: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mike for any closing remarks.
Mike Simonds: Thanks, Debbie, and thank you all for attending. I’ll just close out our call with a big thank you to our incredible colleagues at TriNet. We continue to outperform in the areas that we control, and I’m really grateful to the team that’s worked so hard over the past quarter to produce these really strong results for our customers and for our company. I’m excited to continue our good work over the remainder of the year as we continue to generate increasing value for our shareholders. Thank you very much. And with that, we’ll conclude the call.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
