TriNet Group (NYSE:TNET) has announced its financial results for the fourth quarter of 2025, which reflect a challenging year for small and medium-sized businesses (SMBs). The company achieved results at the upper end of its earnings guidance, reporting higher free cash flow, despite facing persistent issues including elevated medical cost inflation and a sluggish hiring environment.
During the earnings call, President and CEO Mike Simonds and Chief Financial Officer Mala Murthy discussed the company’s strategies for addressing these challenges. Simonds described 2025 as a year of “pricing and operational reset,” emphasizing the unprecedented healthcare inflation and the slowest hiring market since 2020. These factors pressured client hiring and necessitated the repricing of benefits to safeguard margins.
Financial Performance and Revenue Trends
In the fourth quarter, TriNet reported a 2% decline in total revenue compared to the previous year, consistent with the company’s guidance. For the full year, revenue fell by 1%. Murthy attributed this downturn primarily to a decrease in worksite employee (WSE) volumes, despite pricing gains in Insurance and Professional Services revenue.
The company ended 2025 with approximately 323,000 total WSEs, a decrease of 10% year over year, including 294,000 co-employed WSEs, which marked an 11% decline. Retention rates also dropped to roughly 80%, down five points from the prior year, with pricing cited as the leading reason for client departures. Murthy indicated that the company’s final major repricing occurred on January 1, 2026, and expressed optimism for improved retention as the year progresses.
Client hiring remained weak, with the client employment (CIE) growth rate in the low single digits for the second consecutive year. This lag was particularly evident in sectors such as technology and professional services. Although gross layoffs have declined, hiring has not rebounded significantly.
Insurance Services and Cost Management
The performance of TriNet’s Insurance Services also showed mixed results. Revenue in this segment declined by 1% in the fourth quarter and remained flat for the full year. Murthy noted that the revenue per average co-employed WSE increased by 9% in 2025, reflecting the pass-through of health fee increases exceeding 9%.
Insurance costs decreased by 2% year over year in the fourth quarter, largely due to lower volumes, but increased by 1% for the full year, as medical cost inflation outpaced the decline in WSEs. The insurance cost ratio (ICR) for the fourth quarter was 94%, a slight improvement compared to the previous year. For 2026, Murthy projected a combined ICR range of 90.75% to 89.25%, indicating enhanced actuarial capabilities and more stable cost trends.
The company expects medical cost growth to remain between high single- and low double-digit rates, similar to 2025, with pharmaceutical inflation posing a notable headwind.
Strategic Investments for Growth
Executives highlighted the growth of Administrative Services Only (ASO) as a key area for TriNet. Following the discontinuation of its SaaS-only HRIS platform at the start of 2025, the conversion rates to ASO surpassed expectations, with over 39,000 ASO users by year-end and average pricing of about $50 per employee per month.
Professional Services revenue faced challenges, declining by 7% in the fourth quarter and 6% for the year, impacted by a reduction in co-employed WSEs and other factors. On a positive note, January sales showed promising growth, particularly from health brokers, contributing significantly to the near-term sales pipeline.
Simonds noted that TriNet entered 2026 with a strengthened salesforce, including a double-digit growth in tenured sales representatives. The company is also launching an AI-powered HR tool called “TriNet Assistant” to enhance service offerings.
Financial Health and Future Outlook
During the earnings call, Murthy reported a GAAP loss per share of $0.01 for the fourth quarter, while full-year GAAP earnings per diluted share stood at $3.20. Adjusted earnings per diluted share were $0.46 for the quarter and $4.73 for the year, aligning with the top end of the company’s guidance. Adjusted EBITDA for the fourth quarter reached $57 million, with a total of $425 million for the year, resulting in an adjusted EBITDA margin of 8.5%.
TriNet reported $234 million in free cash flow for 2025, a 16% year-over-year increase, supported by improvements in working capital. The company returned $235 million to shareholders through dividends and share repurchases, while also paying off a remaining $90 million balance on its revolving credit facility.
Looking ahead to 2026, management provided guidance for total revenue between $4.75 billion and $4.9 billion and professional services revenue of approximately $625 million to $645 million. The projected adjusted EBITDA margin is expected to range from 7.5% to 8.7%.
The board has also authorized an increase in the share repurchase program, raising the total authorization to $400 million.
TriNet Group, founded in 1988 and headquartered in Dublin, California, offers integrated human capital management solutions tailored for SMBs. Its services encompass payroll administration, employee benefits, and compliance, supported by a cloud-based platform that provides centralized HR tools for its clients.
