TriNet Earnings: Pricing Upside and Mix Shift to Higher-Value Customers Offsets Lower Employment

We maintain our $145 fair value estimate for narrow moat TriNet following the release of reasonable fourth-quarter and full-year fiscal 2023 results, which marginally beat both our top-line forecasts and our profitability expectations. TriNet’s worksite employee base shrank year on year as customers curbed hiring and culled workforces amid challenging macroeconomic conditions and tighter access to credit, exacerbated by the firm’s heavy exposure to the small and medium business technology sector. Nevertheless, TriNet offset these headwinds and improved profitability through like-for-like pricing, a skew toward customers with higher product attachment, near-record-high client retention, and prudent cost control. Following the result, we maintain our longer-term outlook and continue to view shares as attractive.