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DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended
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Sep. 30, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Description of Business TriNet Group, Inc. (TriNet, or the Company, we, our and us) provides comprehensive HCM solutions for small and medium-size businesses under both a PEO model and an HRIS services model. These HCM solutions include multi-state payroll processing and tax administration, employee benefits programs, including health insurance and retirement plans, workers' compensation insurance and claims management, employment and benefit law compliance, and other HR-related services. Through our PEO service model, we are the employer of record for certain employment-related administrative and regulatory purposes for WSEs, including: •compensation through wages and salaries, •certain employer payroll-related tax payments, •employee payroll-related tax withholdings and payments, •employee benefit programs, including health and life insurance, and •workers' compensation coverage. Our PEO clients are responsible for the day-to-day job responsibilities of the WSEs. Through our HRIS and ASO services models, we provide cloud-based HCM services to SMBs that allows them to manage hiring, onboarding, employee information, payroll processing, payroll tax administration, health insurance, and other benefits, from a single cloud-based software platform. We are not the co-employer or employer of record for such employees. We operate in one reportable segment. All of our service revenues are generated from external clients. Less than 1% of our revenue is generated outside of the U.S. Basis of Presentation and Basis of Consolidation These unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission. The unaudited condensed consolidated financial statements include the accounts of the Company and an entity consolidated under the variable interest model. Intercompany balances and transactions have been eliminated. Certain information and note disclosures included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, that are normal and recurring in nature, necessary for fair financial statement presentation. The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the operating results anticipated for the full year. These financial statements should be read in conjunction with the audited Consolidated Financial Statements included in Part II, Item 8. Financial Statements and Supplementary Data of our Annual Report on Form 10-K for the year ended December 31, 2024. Certain prior year amounts have been reclassified to conform to current period presentation. When entering into contractual arrangements with other entities, we assess whether we have a variable interest. If we determine that we have a variable interest, we then determine whether the arrangement is with a variable interest entity ("VIE"). If the arrangement is with a VIE, we assess whether we are the primary beneficiary of the VIE by identifying the most significant activities and determining who has the power over those activities and who has the obligation to absorb the majority of the losses or benefits of the VIE. We consolidate a VIE when we have the power to direct activities that most significantly affect the economic performance of the VIE and have the obligation to absorb the majority of their losses or benefits, making us the primary beneficiary. Periodically, we assess whether any changes in our interest or relationship with the entity affect our determination of whether the entity is a VIE and, if so, whether we are the primary beneficiary. In December 2023, we created a trust ("TriNet Trust") for the purpose of holding ASO clients' payroll funds for the remittance to ASO Users, tax authorities and other recipients. TriNet Trust's assets are restricted and can only be used for payments on behalf of ASO clients, repayments of any advances from TriNet, or payments to TriNet of interest income earned on the balances of TriNet Trust. In the event of any losses, creditors to the Trust have recourse to TriNet Trust's property and not that of TriNet overall. The risks associated with the Trust are similar to those that currently exist for the Company such as banking losses in excess of FDIC insurance levels, interest rate and market conditions. We determined that TriNet Trust meets the definition of a variable interest entity and as the primary beneficiary we have both the power to direct TriNet Trust’s activities that most significantly affect its performance and we have the right to receive benefits from TriNet Trust, in the form of interest income. As a result, TriNet Trust is consolidated into our financial statements. During the first quarter of 2024, TriNet Trust assumed ownership and responsibility of certain bank accounts that hold HRIS client funds and assumed related liabilities. The following table presents the assets and liabilities of TriNet Trust which are included in our condensed consolidated balance sheet. These amounts on any particular date can vary due to timing of cash receipts and remittances related to the payroll processing activities of our clients.
|  | September 30, 2025
(in millions) |  | TriNet Trust |  |
ASSETS |  |  |  |
Current assets: |  |  |  |
Cash and cash equivalents |  | $ | 3 |  |  |
Restricted cash, cash equivalents and investments |  | 63 |  |  |
Total current assets |  | 66 |  |  |
Total assets |  | $ | 66 |  |  |
LIABILITIES |  |  |  |
Current liabilities: |  |  |  |
Accounts payable and other current liabilities |  | $ | 1 |  |  |
Accrued wages |  | 14 |  |  |
Payroll tax liabilities and other payroll withholdings |  | 49 |  |  |
Total current liabilities |  | 64 |  |  |
Total liabilities |  | $ | 64 |  |  |
Reclassifications Income Statement Certain prior year amounts on the Condensed Consolidated Statement of Income and Comprehensive Income have been reclassified to conform to current period presentation. Specifically, interest income previously included in the former Other income (expense) category is now classified as a component of Total revenue. Similarly, Interest expense, bank fees and other has been reclassified as part of total expenses. These reclassifications eliminate the profitability measure of Operating Income on our Condensed Consolidated Statement of Income and Comprehensive Income, which is not a key measure of profitability used by management. Statement of Cash Flows Certain prior year amounts on the Condensed Consolidated Statements of Cash Flows have also been reclassified to conform to current period presentation, with no impact on the Condensed Consolidated Statements of Income and Comprehensive Income, Condensed Consolidated Statement of Balance Sheets and Condensed Consolidated Statements of Stockholders' Equity. In particular, changes in WSE related assets and liabilities were previously reported within operating activities and are now reclassified into financing activities to better reflect operating activities excluding the impact of client cash flows.
|  |  |  |  | Nine Months Ended September 30, 2024
(in millions) |  |  |  |  | As previously reported | Reclassified amounts | As revised
Operating activities |  |  |  |  |  |  |
Changes in operating assets and liabilities: |  |  |  |  |  |  |
Accounts receivable, net |  |  |  |  | 2 |  | (7) |  | (5) |
Payroll funds receivable |  |  |  |  | (64) |  | 64 |  | — |
Prepaid expenses, net |  |  |  |  | 3 |  | (15) |  | (12) |
Other assets |  |  |  |  | (44) |  | 2 |  | (42) |
Other payroll assets |  |  |  |  | (502) |  | 505 |  | 3 |
Accounts payable and other liabilities |  |  |  |  | (13) |  | 3 |  | (10) |
Client deposits and other client liabilities |  |  |  |  | (27) |  | 18 |  | (9) |
Accrued wages |  |  |  |  | 52 |  | (75) |  | (23) |
Accrued health insurance costs, net |  |  |  |  | 18 |  | (20) |  | (2) |
Accrued workers' compensation costs, net |  |  |  |  | (19) |  | 5 |  | (14) |
Payroll taxes payable and other payroll withholdings |  |  |  |  | (18) |  | 10 |  | (8) |
Net cash used in operating activities |  |  |  |  | (612) |  | 490 |  | (122) |
Financing activities |  |  |  |  |  |  |
Change in WSE and TriNet Trust related assets and liabilities, net |  |  |  |  | — |  | (490) |  | (490) |
Net cash used in financing activities |  |  |  |  | — |  | (490) |  | (490) |
Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect certain reported amounts and related disclosures. These estimates are based on historical experience and on various other assumptions that we believe to be reasonable from the facts available to us. Some of the assumptions are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our condensed consolidated financial statements could be materially affected. Accrued Health Insurance Costs We sponsor and administer a number of employee benefit plans for our PEO WSEs, including group medical, dental, and vision as an employer plan sponsor under section 3(5) of the ERISA. In the nine months ended September 30, 2025, the majority of our group health insurance costs were related to risk-based plans. Our remaining group health insurance costs were for guaranteed-cost policies. Accrued health insurance costs are established to provide for the estimated unpaid costs of reimbursing the carriers for paying claims within the deductible layer in accordance with risk-based health insurance policies. These accrued costs include estimates for claims incurred but not paid. We assess accrued health insurance costs regularly based upon actuarial studies that include other relevant factors such as current and historical claims payment patterns, plan enrollment and medical trend rates. In certain carrier contracts we are required to prepay our obligations for the expected claims activity for subsequent periods. These prepaid balances by agreement permit net settlement of obligations and offset the accrued health insurance costs. As of September 30, 2025 and December 31, 2024, prepayments and miscellaneous receivables offsetting accrued health insurance costs were $118 million and $60 million, respectively. When the prepaid amount is in excess of our recorded liability, the net asset position is included in prepaid expenses. As of September 30, 2025 and December 31, 2024, accrued health insurance costs offsetting prepaid expenses were $27 million and $90 million, respectively. Revenue Recognition Interest Income We recognize interest income on cash and investments as revenue because the collection and processing of funds held for the benefit of our clients are critical components of providing these services. Interest income is recognized when earned. Our portion of any interest income received from tax jurisdictions related to tax refunds is recognized when the timing and amounts of the interest are determinable. Other Payroll Assets and Payroll Tax Liabilities and Other Payroll Withholdings Included in other payroll assets are expected payroll tax refunds for which we have filed payroll tax returns claiming the refund with the IRS. Included in these receivables are ERTC and other credits that we have filed returns for on behalf of our clients. When we file a claim for a refund that will be passed on to our clients, we recognize a corresponding liability that is recognized in payroll tax liabilities and other payroll withholdings. We also have receivables from the IRS for ERTC claims where we have distributed portions of the receivables to our clients. As of September 30, 2025 and December 31, 2024, total ERTC receivables are $389 million and $831 million, respectively. Of this amount $20 million and $72 million have been distributed to our clients as of September 30, 2025 and December 31, 2024, respectively. Leases As of September 30, 2025, the establishment of our new corporate center in Atlanta and executing lease space has added $40 million to our future minimum lease payments and $19 million and $18 million to our operating lease ROU asset and liability, respectively. Recent Accounting Pronouncements Recently issued accounting guidance Disaggregation of Income Statement Expenses In December 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Disaggregation of Income Statement Expenses, is to enhance the transparency and decision-usefulness of financial reporting by requiring public business entities to provide more detailed disclosures about the components of certain expense captions in their income statements. The ASU is effective for TriNet on a prospective basis for annual periods beginning after December 15, 2026. The Company is currently evaluating the provisions of this ASU. Income Taxes In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosure requirements. The ASU mandates additional details in the income tax rate reconciliation, including quantitative thresholds for reconciling items, and requires disaggregation of income taxes paid by federal, state, and foreign jurisdictions, with further breakdowns for significant individual jurisdictions. The ASU is effective for TriNet on a prospective basis for annual periods beginning after December 15, 2024. The Company is currently evaluating the provisions of this ASU. Internal-Use Software In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06) which amends the guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the provisions of this ASU.

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