TRINET GROUP INC

Current report

Our SMB clients are particularly affected by volatility in the economic environment.

Current report

SMBs can be particularly susceptible to changes in the level of overall economic activity in the markets in which they operate. These businesses are often exposed to credit and cash liquidity risks, including exposure as a result of the failure of their financial institutions, that larger businesses may be able to avoid, and during periods of weak economic conditions, including periods of increased inflation and increased borrowing costs, SMB failures tend to increase, and employment levels tend to decrease. During these periods, our clients can and do freeze hiring, terminate their employees, and reduce compensation and benefits levels, any of which would negatively affect our revenues and margins if we are unable to reduce our operating expenses sufficiently or quickly enough. During these periods, we have also seen and expect to see, reduced demand for our services, increased client terminations, fewer new clients, and clients seeking to renegotiate our contracts and prices. When our clients leave us or reduce their headcount, we typically see increases in the volume and severity of unemployment claims, COBRA claims, disability claims, and workers’ compensation claims. We may be unable to recover costs related to these claims based on the fees established in our client service agreements, and any failure to recover such costs may have a material adverse effect on our business, financial condition and results of operations.

Previous report

We face risks associated with our international operations

Previous report

In August 2024, we opened a new office in Hyderabad, India, which increases the size and scale of our India-based workforce and operations. Historically, our business and operations have been primarily conducted in the United States. A disruption to, or our failure to successfully integrate, our operations in India involves risks. The risks associated with this and potential future international operations include:

Previous report

•fluctuations in foreign currency exchange rates and global market volatility;

Previous report

•difficulties and costs of staffing and managing foreign operations, including cultural and language differences and additional employment regulations, union workforce negotiations and potential disputes;

Previous report

•geopolitical, economic or social instability or military conflict;

Previous report

•natural disasters, terrorist attacks and other events over which we have no control;

Previous report

•compliance with local laws and regulations, including privacy and security laws and regulations;

Previous report

•compliance with laws governing doing business outside the United States, including foreign or domestic legal and regulatory requirements resulting in the imposition of new or more onerous sanctions and anti-corruption laws, export and import controls, trade restrictions, tariffs, duties, taxes, embargoes, exchange or other government controls;

Previous report

•laws and business practices favoring local companies; and

Previous report

•management of potentially adverse tax consequences from India, the United States, or both, as a result of our multi-jurisdiction operations.