2024-04-12 12:16:09 ET
Summary
- TriNet's investments in growth appear to be paying off, with the company reporting robust new sales and retention throughout 2023.
- WSE growth is the most important metric to track for TriNet, and it appears to be on the verge of expanding.
- TriNet's acquisition of Zenefits appears to be driving customer growth.
Investment Thesis
My investment thesis for TriNet Group, Inc. (TNET) hinges on customer growth, particularly in Worksite Employees (WSEs). Zenefits has opened up a new market for TriNet while improving the PEO business. New sales growth and retention improvement will be the foundation upon which TriNet can deliver market-beating returns. The company continues to optimize its per-client efficiency and could be poised to experience an inflection of revenues once the hiring market recovers in its industry verticals. Investments in growth have begun to pay off for TriNet, and 2024 could be the year that the company inflects revenue growth higher. Whenever this happens, investors may want to make sure they are a little early to the party.
All indications are that TriNet has successfully executed its three pillars of PEO growth: improving its new sales annual contract value (new sales ACV) and retention, and showing signs that its Zenefits acquisition is beginning to pay off. WSE users have improved marginally and appear to be on an upward trajectory, with reason to believe this turnaround will continue for the foreseeable future....
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TriNet: Potential Revenue Growth Inflection In 2024