Good day and welcome to the TriNet third quarter 2020 earnings conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. And I would now like to turn the conference over to Alex Bauer of Investor Relations. Please go ahead, sir.

Thank you, operator. Good afternoon everyone and welcome to TriNet's 2020 third quarter conference call. Joining me today are Burton Goldfield, our President and CEO, Kelly Tuminelli, our Chief Financial Officer, immediately following the filing of our third quarter Form 10-Q and Mike Murphy, our Interim Chief Financial Officer. Our prepared remarks were prerecorded. Burton will begin with an overview of our third quarter operating performance. Mike will then review our third quarter financial results. Finally, Kelly will provide our forward-looking guidance. We will then open up the call for the Q&A session. Before we begin, please note that today's discussion will include our 2020 fourth quarter and full year guidance and other statements that are not historical in nature are predictive in nature or depend upon or refer to future events or conditions, such as our expectations, estimates, predictions, strategies, beliefs or other statements that might be considered forward-looking. These forward-looking statements are based on management's current expectations and assumptions and are inherently subject to risks, uncertainties and changes in circumstances that are difficult to predict and that may cause actual results to differ materially from statements being made today or in the future. Except as may be required by law, we do not undertake to update any of these statements in light of new information, future events or otherwise. We encourage you to review our most recent public filings with the SEC, including our 10-K and 10-Q filings, for a more detailed discussion of the risks, uncertainties and changes in circumstances that may affect our future results or the market price of our stock. In addition, our discussion today will include non-GAAP financial measures, including our forward-looking guidance for net insurance margin, adjusted EBITDA margin and adjusted net income per diluted share. For reconciliations of our non-GAAP financial measures to our GAAP financial results, please see our earnings release or our 10-Q filing for our third quarter, which is available on our website or through the SEC website. With that, I will turn the call over to Burton for his review of our operating performance and market environment. Burton?

Thank you, Alex. I am extremely proud of TriNet's operating and financial performance during the third quarter. After navigating a difficult second quarter where we felt the full impact of COVID-19, we entered the third quarter resolved to make the best of a challenging operating environment. Our customer base, operating model and prospecting processes were all disrupted and still face uncertainty. We are responding to this uncertainty by doing what we are passionate about, putting SMBs at the center of everything we do. Specific highlights since our last earnings report include: we realized strong WSE volume in Q3 and growth in our volume over Q2. This compared favorably to the broader economic environment and our own forecast. We implemented the industry-leading recovery credit program and shared the program details with the first cohort of TriNet customers. It was greeted with widespread appreciation. And we hosted our first-ever conference focused on small and medium-size business leaders, the TriNet PeopleForce Conference. In the face of COVID-19, we delivered strong financial performance due to our resilient customer base, which has been acquired through a verticalized go-to-market strategy and a unique business model that adds significant value across a wide range of strategic and operational issues facing small businesses in America. During the third quarter, GAAP total revenues increased 1% year-over-year, while GAAP earnings per share declined 38% year-over-year. Please note that our reported financial performance in the quarter includes a revenue accrual for our recovery credit program, which Mike will address later. The recovery credit program is our effort to share with our customers the excess cost savings we generated from underutilized health services, primarily in April. Historically, our business model has been to assume a deductible layer for the majority of our health plans. We are able to take this layer in part due to our strong balance sheet. Because of this plan construct, we had immediate access to the significant savings generated in April. Leveraging those savings, we created the recovery credit program, our explicit effort to ensure a portion of these savings are used for the benefit of our customers, all within one year. Said another way, the recovery credit program ensures that those customers who are committed to us and our partnership have access to the savings when they need them most. We believe the recovery credit program represents the best usage of these savings. Through this program, we are investing in the success of our customers rather than choosing to subsidize new customers or set low expectations for ongoing health costs. Importantly, the first customer cohort received notice of their recovery credit during the third quarter. These are customers whose contracts renewed with us on October 1. The preliminary response rates were very encouraging and indications for future retention are positive. We will be able to report on the full benefits of the program in 2021. Despite the ongoing economic uncertainty, our third quarter was distinguished by stable volumes. We ended the quarter with approximately 321,000 WSEs, down 3% year-over-year but up 2% sequentially versus the second quarter. Our acquisition of Little Bird HR accounted for approximately 1% of incremental WSE volume in the quarter. We attribute our volume outperformance to our amazing customer base and our unique approach to customer selection. The installed base continues to be comprised of nearly 80% white-collar workers, which thus far have withstood the impact from the pandemic better than our blue-collar verticals. Continuing a trend we saw emerge in June, our white-collar verticals continued to add new employees throughout the third quarter. In fact, during the third quarter, our installed base hired more net new WSEs than they did in the same quarter last year. The hiring was consistent across all of our white-collar verticals with technology being the leader. Additionally, the overall return of economic activity across the country positively impacted our installed base and served to mitigate the lack of additional PPP funding. New sales remain challenged during the third quarter relative to last year. We continued to close net new business in the quarter; however, at lower volumes than last year. Significantly, we have not yet returned to face-to-face sales calls. We are leveraging our installed base for referral business. Our close rates are higher when prospects are referred by our current customer base. Last week, we hosted the first annual TriNet PeopleForce Virtual Conference. TriNet PeopleForce is our forum to provide SMBs with real insights, thought leadership and recommendations for the challenges they face. Additionally, we highlighted the depth of the TriNet leadership team. This well-attended event allowed thousands of SMBs, which included TriNet customers and prospects, to participate in discussions around critical issues facing their companies with a diverse group of business experts, public officials, and thought leaders. These speakers included Former President George W. Bush, Former Attorney General Eric Holder, Former White House Deputy Chief of Staff Mona Sutphen, American Pathogen Preparedness Expert Dr. Syra Madad, and current TriNet customers who are achieving amazing results, among many others. Over a three-day period, TriNet PeopleForce tackled key challenges such as business resiliency, diversity, equity and inclusion in the workplace, healthcare, including cost management and employee access, legislative updates and access to government programs and stimulus, and finally an economic outlook for SMBs. Examples were given by speakers like Samantha Snabes around the challenges her company re:3D faces and TriNet's involvement in helping her company grow. I am pleased that TriNet can leverage our market position which has been gained over a 30-year period to provide this critical information for the benefit of our customers and the SMB community at large. The TriNet value proposition continues to resonate, as demonstrated by events like TriNet PeopleForce. We are optimistic growth will return as the economic environment improves. Still, our outlook remains cautious. Until either a vaccine or improved therapies are generally available and economic confidence is restored, or additional stimulus packages are approved, SMBs will face an uncertain fall and winter. Over the last two quarters, TriNet demonstrated its commitment to our customers by our enhanced service model, the recovery credit program and the TriNet PeopleForce conference. For our customers and prospects, TriNet represents a comprehensive, differentiated solution that is so much more than payroll, HR software, or access to benefits. We are passionate about our customers' success. Specifically, we are using TriNet scale as one of the largest single employers in the United States to provide an always-on service model with instant access to information and support for small businesses, access to a wide variety of large group health and welfare plans not generally available to small businesses, and investments in technology that benefit SMBs currently and in the future. We believe this holistic approach, which is resonating in the market, will become even more valuable in the future as companies return to growth post-COVID-19. Finally, I would like to formally welcome Kelly Tuminelli to TriNet. Kelly was appointed as our Chief Financial Officer immediately following the filing of our third quarter Form 10-Q. Kelly brings significant experience and insights with her insurance background and tremendous leadership skills. Over the past six weeks, I have enjoyed working with her as together we drive TriNet's growth and success. Kelly's addition represents a further strengthening of our management team and as such, I believe we are well-positioned for growth as the economic environment improves. With that, I will pass the call over to Mike to provide a review of our third quarter financial performance. Mike?

Thank you, Burton. During the third quarter, GAAP total revenues increased 1% year-over-year and professional service revenues declined 3% year-over-year. GAAP total revenues outperformed the top of our guidance range by 4%, as WSE volumes outperformed with a mix of WSEs remaining nearly 80% white-collar workers. GAAP total revenue growth was driven by a 5% growth in total price or rate, combined with 5% growth from a change in mix in WSEs, which is the proportionate WSEs in each vertical and the offerings that they enroll in. This was offset by a 4% year-over-year decline in average WSEs to 318,000, which includes the impact of our acquisition of Little Bird HR and also a 5% or $48 million reduction in revenue from our continued accrual for our recovery credit program. Over the last two quarters, we have accrued $104 million for the recovery credit program and we continue to see net savings from the underutilization of health services, broadly from what we reported previously. Net service revenues in the quarter decreased 2% year-over-year, outperforming the top-end of our guidance range by 15 points. For the third quarter, we delivered a net insurance margin of 11% versus our Q3 guided range of 6% to 8%. The outperformance in net insurance margin during the third quarter was again driven by reduced health utilization and the change in the pattern of our expected incremental investments in our customers as a result of COVID-19. We saw two trends emerge during the third quarter. First, while we saw a return to some normalization of doctor visits and outpatient procedures, excluding COVID-19 services, the frequency of all services, and notably inpatient procedures remain depressed. Overall, our utilization is at 98% to prior year volume. Second, we continue to see direct COVID health costs which totaled approximately 3% of overall health costs in the quarter. About half of these costs were attributable to testing. In addition, we have changed some of the value and timing of our commitment to reinvesting with our clients. This change reduced our anticipated recovery credit accrual in the period and contributed to a 1% improvement to each element of GAAP revenues and a 1% improvement to net insurance margin. In the third quarter, we delivered an adjusted EBITDA margin of 32%, outperforming our expectations. As the volume strength drove revenue growth, health costs remained lower and OpEx remained constrained. We spent approximately $35 million to repurchase 521,000 shares of stock in the third quarter. Our third quarter effective tax rate was 14%. In the quarter, we benefited from improvements in our state taxes and from the tax treatment of employee equity compensation. Our per share results in the third quarter significantly outperformed our guidance and reflect the impacts of the excess cost savings generated. GAAP net income per share decreased 38% to $0.48 compared to $0.78 per share in the same quarter last year. Adjusted net income per share decreased 31% to $0.56, compared to $0.81 per share in the same quarter last year. I will now turn the call over to Kelly to provide our fourth quarter outlook. Kelly?

Thank you, Mike. I am very excited to have joined TriNet during this time, understanding the impacts we can make on our client base. I am particularly passionate about leveraging my background and prior experience to work across the organization to streamline enterprise pricing processes, enhance enterprise analytics and enable a consistent 360-degree view of customer lifetime value, which I believe will be critical to TriNet's strategy and direction moving forward. Now let's turn to our 2020 fourth quarter and full year outlook. As Burton discussed, while we are pleased with the recovery in our WSE base driving strong volume performance, we remain cautious in our forward outlook. The high end of our fourth quarter guidance reflects an environment where the nascent economic recovery continues with its positive implications from deployment and consumer activity, the states imposed localized lockdowns where virus surges are being experienced rather than broad sweeping lockdowns and a stimulus package was passed in November. The low end of our range reflects an environment where the economic recovery stalls as we experienced regional COVID case surges and related surge into our COVID costs, additional stimulus to wait until much later in the fourth quarter, and bankruptcies increase as a cohort of customers finally capitulate to the difficult operating environment. In the low end, we anticipate that TriNet would realize lower revenues than last year, partially offset by reduced health utilization, even with higher direct COVID-specific costs. Our outlook reflects a recovery credit accrual totaling 2% to 3% of fourth quarter GAAP revenue. As mentioned in prior quarters, on a full-year basis, we will experience significant one-time benefits to net insurance margin from COVID-19, which we believe will not recur in 2021. Our recovery credit program extends into 2021 and we anticipate continuing to accrue over that period. We are not planning to further discuss 2021 net insurance margin or guidance today as we think it's important to evaluate the progression of COVID-19 over the next few months. For the fourth quarter of 2020, we expect GAAP revenue to be in the range of flat to up 2% as our strong third quarter sequential average WSE improvement moves our fourth quarter above our prior forecast. We expect our fourth quarter net service revenue to be in the range of down 2.75% to down 12% year-over-year. We expect our fourth quarter net insurance margin to be in the range of 4% to 8%, reflecting the recovery credit accrual and incremental COVID costs, partly offset by suppressed healthcare utilization. We expect to realize an adjusted EBITDA margin range in the quarter of 8% to 21%. We expect Q4 GAAP earnings per share to be in the range of negative $0.13 to positive $0.19 or down 119% to down 72% year-over-year, and adjusted net income per share is expected to be in the range of breakeven to up $0.32 or down 100% to down 62% year-over-year. Regarding our full year 2020 guidance, given three quarters of performance, our better than expected volume, and increased cost savings in our fourth quarter guidance, we are raising this full-year guidance. We now expect to grow GAAP revenue in the range of up 3% to 4%, up from flat to up 1%, driven by the recovery in our average WSE count and consistent with our economic outlook. Net service revenues are now forecasted to grow 8% to 11% year-over-year, up from flat to 5% growth. We expect our full year 2020 net insurance margin to approximately 14%, tightened from our previous range of 12% to 14%. Our full year 2020 adjusted EBITDA margin is expected to be in the range of 43% to 44%, raised from our previous range of 38% to 41%. GAAP earnings per share is now expected to grow year-over-year in the range of 18% to 29% or $3.53 to $3.85 per share, raised from down 8% to up 9% year-over-year. Adjusted net income per share is now also expected to grow year-over-year in the range of up 20% to up 31%, or $3.99 to $4.34 per share, raised from down 3% to up 14% year-over-year. Overall, we are pleased with the signs of economic recovery and the resilience of our business model and white-collar vertical focus, as well as the containment of costs associated with COVID-19. We do remain focused on the range of potential outcomes for 2021 insurance cost performance, given various ways in which COVID-19 may cause WSEs to delay preventative and non-urgent medical services as well as potential for a downturn in utilization or additional direct COVID-19 costs next year. With that, I will return the call to Burton for his closing remarks. Burton?

Thank you, Kelly. I was pleased with our performance during the third quarter and, in fact, our financial performance during the first three quarters of this unique year, given the significant disruptions that the pandemic has brought to our customers. Our clients are the small and mid-sized businesses, driving America's growth. They are resilient. They hired during the quarter in greater numbers than during the same quarter last year. The recovery credit program, TriNet PeopleForce, and all of our other initiatives are intended to best serve and retain our customers while driving profitable growth. As we look forward, I am excited to work with Kelly and our broader leadership team. I am proud of the entire TriNet team and want to thank them for what they do. This team has responded effectively during the COVID crisis. There is a tremendous desire by SMBs for guidance and partnership. TriNet is passionate about this desire and uniquely positioned to fill this need. Operator?

And our first question today will come from Tien-Tsin Huang with JPMorgan. Please go ahead.

Hi. Thanks so much. Kelly, welcome to the call. So I will ask you the first question, if you don't mind. Just curious, with you coming over with an insurance background, what attracted you to the TriNet business? Any surprises on the quality of the book and how TriNet maybe can better engage with the carriers as you are coming over from that side of it? I heard the 360 view on LTV, which is interesting. So maybe something you can elaborate there, that would be great too? Thanks.

Hi, Tien-Tsin Huang, thanks. So as for TriNet, really what attracted me to TriNet, I think it's a tremendous growth opportunity, frankly. When I look at the market and I see from my perspective how underpenetrated it is, I think we have got a lot of room there. It's hard to call anything from an insurance perspective in this environment with COVID-19 because trends are not what you would expect from a normal trend perspective. So I think that's kind of tough. What I would say is, with insurance background, it's about looking at the data, looking at the customers, the underwriting experience, etc., and continuing to evaluate that. But TriNet, as you know, we like the risk and we will always continue to do that. Regarding a 360 view of customer lifetime value, I think the team has done a really good job at trying to understand its customers. I think in this environment, it's really played out in terms of focusing on white-collar verticals, just given the fact that they were less impacted by the COVID-19 pandemic. But I think, like anything, we have been investing in process improvement and I think we can continue to invest in our processes overall and really refine our view with data of what we think that longer-term value from the customer is. I am six weeks in. So still getting up to speed, for sure. But thrilled to be here and very excited about the opportunity.

Thank you for that. As a quick follow-up regarding the recovery credit program, which you provided a lot of information on and rolled out to the first group of TriNet customers, could you share any insights on how this might impact retention as you expand this initiative to the rest of your customer base?

Great follow-up question. I think in terms of the recovery credit and as we look forward, we just got really early views. Like Burton mentioned, we rolled it out to really the first cohort with renewals coming up in October. We are not going to really call the impact on 2021 yet because we really want to see, as you know, most of the renewals happen with the calendar year. And we really want to see that January performance before we give any further specifics on that. We would absolutely expect to give you more of an update on the fourth quarter call. But the reception is favorable. I think Burton mentioned that in his prepared remarks that it's favorable. Burton, anything you want to add?

Hi, Tien-Tsin Huang, how are you?

Great. Good to hear from you guys.

Yes. It's great to hear from you as well. So what I would add to that, being in the middle of it, is the feedback from the recovery credit program really highlighted that we are invested in our customers' success and that their success is our success. I believe this customer base, as you have heard me say over many, many years, and we will be part of the recovery and we will help them recover. And ultimately, this help, coming in a very critical time in their existence, has a significant impact on these stakeholders. So ultimately, I believe all of our stakeholders will benefit from it. And it's a pretty unique program, which I am excited about.

Got it. Well said. It will be interesting to see how it goes. Thank you for the update guys. Thank you.

Yes. Exactly.

And our next question will come from Andrew Nicholas with William Blair. Please go ahead.

Hi. Good afternoon.

Hi Andrew.

Just a little bit of a follow-up. As we kind of look towards next year, I know you are not giving guidance, but I do want to ask, just if we are in the unfortunate position of the country facing another wave of COVID over the next couple quarters and you experience similar healthcare utilization and cost dynamics in the first half of next year, would you expect to react similarly in terms of rebates or credit programs? Or maybe just asked a different way, how would you expect your approach to change if faced with similar circumstances in 2021?

Yes. Great question again. We are really going to watch the progression of COVID over the next three or four months, just to be able to see where it's going and what we think is going to happen to healthcare utilization. Right now, we have not discussed anything further on that. And we would obviously give you more updates as we see more experience develop. But there are currently no plans at this point in time. Let me throw it back over to Burton as well.

So Andrew, great question. This is a one-time program from our vantage point. I believe that the vertically oriented business model we are using, which focuses on attractive industries where our value proposition is particularly well-suited, give us an opportunity to help those customers succeed in this environment. But next year will be another interesting year and we will help our customers achieve what they are trying to achieve in these verticals that we service.

Great. That's helpful. And then as I follow-up, I was hoping we could just spend a little bit more time talking about the sales environment. You did obviously touch on it in your prepared remarks. But any more color on how you are thinking about the pipeline, conversion rate, length of the sales cycle? And any indications at this point, I know it's still October, but how that might evolve over the next couple months? Obviously, you are getting into peak keep selling season. Any more color there would be great. Thank you.

Absolutely. So what we are seeing is a lot of activity, deep conversations, but deferred decision-making. Andrew, in its simplest form, what we are seeing is prospects are frankly more concerned about the front of the shop right now. They are concerned about staying in business. While I believe we can help with that, it's difficult for them to make a back-end change in the current environment. We are focused on servicing our customers and we know there is a direct correlation between the customer set, referrals and net new business, which should pay off over time. I think ultimately these opportunities that have the deep conversations will be meaningful as things re-accelerate in the future. Also, talking a little bit about the PeopleForce conference, the feedback that we got was absolutely incredible, both from the value that people got out of it, but also equally importantly, the community that they felt around SMBs brought together by TriNet. So I am optimistic the economy will return. I can't give you that date. But I do believe we are investing heavily in making sure that these companies do as best that they can in this particular environment. I will share one comment that I got from PeopleForce, which was pretty personal where somebody said, your conference really helped my morale. I felt supported and I felt someone actually understood the crippling pressure I have been under to maintain cash flow and keep paying payroll. Thank you very much. So I do believe we are building a community and we are going to try to provide the thought leadership necessary to evolve out of this situation. But again, as you said, these are conversations and the close rate, hopefully, will come back to normal once things get back to normal in the economy.

Great. Thanks again.

And our next question will come from Kevin McVeigh with Credit Suisse. Please go ahead.

Thank you and congratulations on the results. Can you help us understand the difference between the 1% net interest margin you reported in Q3 and the expected range of 4% to 8% for Q4? How much of that difference is due to recovery accrual versus increased expenses? Are there any other factors we should consider while looking at the transition from Q3 to Q4?

Yes. Kevin, this is Kelly. I will take that one. A couple of things that I would remind is really the seasonality that we face. So I mentioned in the prepared remarks that originally we had assumed there would be somewhat of a surge in the third quarter, which we frankly didn't see. Mike said we had that 2% lower utilization rate or about 98% of utilization, excluding COVID-specific costs. So it's not anything unusual that we are thinking about in terms of the fourth quarter. But when you think about the 4% to 8% net insurance margin, I did mention, the recovery accrual would be between 2% and 3% of GAAP revenue. So if you project GAAP revenue, you can see what the impact on the recovery credit would be on net insurance margin. But I really view that more as a seasonality than anything else that we typically see better net insurance margin in the first quarter, just given deductibles and things like that when people's health plans renew. And then it degrades throughout the year as people burn through their deductibles.

It's helpful. And then just in terms of any thoughts on the retention in the quarter? And then I know we are not talking about 2021 in particular, but the recovery credit, all else being equal, it should probably help the retention in 2021. But is there any way to think about just the impact of recovery credits and the impact on retention overall?

So for the quarter and we saw that our attrition very definitely improved and therefore our retention improved. We don't give out that number. So in addition to that, we saw that our clients in the third quarter really followed the path that they had in June and all of the verticals returned to net hiring, particularly strong growth in net hiring in both technology and life sciences vertical. But as I said, all of them improved.

Yes. And regarding the fourth quarter, we would anticipate that the recovery credit does move in relative to retention. So we think we have strong retention. Like we said, we are not going to really forecast 2021 or give you a view on 2021. But I do think that we will see how January comes through, but given all the indications we have got so far, it's definitely a positive. And let me give it to Burton for any other remarks.

Yes. I would just add that on the last call, we talked about the growth in June in hiring. The fact that it continued throughout the quarter was a very positive trend that frankly we had not counted on in the guidance we have given.

And our next question will come from Sam England with Berenberg. Please go ahead.

Hi guys. Just conference you made this last one, you talked about how well the white collar targeting is holding up. I just wondered, how much variation you have been seeing between different industry verticals? Whether there has been any particular strong or weak verticals from a retention perspective? Also, any new customer additions or WSE additions?

Yes. So what we saw in the third quarter, as I said previously, was strong growth in technology and life sciences. And then we saw, although we saw some growth in hiring in professional services and in main street, it's not growing at the same rate. I would also say that that change in relative growth wasn't significant enough to really change the overall mix between white-collar and the blue-collar verticals.

Okay. Great. Thanks. And then you obviously finished the quarter again with a strong balance sheet position. I just wondered how you are thinking about M&A at the moment? And what the M&A landscape looks like? And I suppose more broadly, how you are thinking about capital allocation priorities over the next, say, six to 12 months?

Great. I am happy to answer that, Sam. Regarding M&A, we are definitely focused on it. Where the rates of return and cost of acquiring WSEs are attractive, we will pursue it in those instances, also where the strategy makes sense. I don’t feel M&A approach is changing that if there are geographies or verticals that we particularly like, we will pursue them or technology or tuck-ins. So the M&A, our approach for M&A really hasn’t changed. But in terms of capital allocation overall, the first priority is organic growth. Second would be M&A. And then thirdly, as we think about returning capital to shareholders, we would obviously continue with our repurchase program. So that’s kind of how we are thinking about it.

Okay. Great. Thanks very much.

Thank you.

And our next question will come from David Grossman with Stifel Financial. Please go ahead.

Thank you. Good afternoon.

Good afternoon, David.

So you have given us some great information about positive trends in hiring and retention and then offset by what looks like a more challenging new sales environment. And I know you don't want to provide any context or guidance for 2021. But can you give us any sense for how we balance those? Because the hiring sounds like it's gone better than planned. You have got the credit in place to help with retention. But sales are off and it's kind of hard to really get a sense for how we should think of relative leading as we go into next year?

Yes. Let me take it and then I am going to pass it to Burton to give a view on, just his view at a very top level on the environment. But in terms of, I think he said it well in his prepared remarks when he said that the back office is a little bit not a priority at this point in time. And so we are also seeing it's not the priority which is helping retention as well. So I think we have been pleased with the net hiring that we have got in the quarter and the high end of our guidance for fourth quarter stands modest on that hiring as well. The low end would assume really some of those companies just can't make it through the environment given worsening COVID and lack of stimulus until very late in the quarter. But I am going to throw it to Burton to give you more perspective on sales and conversations going on.

Yes. So David, three things I would point out. One is, you know very well that I have been maniacally focused on the verticals that we serve and the community that we are involved in appears to be doing better than the overall SMB community. So I am very pleased with that aspect of our business. I also believe the fact that we have narrowed down to these communities, we are able to give them better service and be more focused on helping them in these difficult times. As you are, complexity is our friend here and I believe that the overall situation is allowing our full service solution to show very, very well. I think tangentially is this issue of deferred decision-making. There is a significant amount of activity. There is a significant amount of business interests as we saw from the PeopleForce Conference. How to handicap that will directly what happens in the return of the economy. So for me, the timing issue is not a matter it is a matter of where and I simply. So for me, it's a timing issue, it's not a matter of if, it's a matter of when. And I simply don't know how to handicap that. What I do know is that by helping our current customers by having them grow and be retained by TriNet, I have a bird in the hand that can grow my business wall the recovery of the new sales takes place.

Got it. And then Burton, just historical context, my recollection is that you had some kind of program in place, maybe not exactly what you are in place now back in 2018. And A, am I remembering that correctly? And if I am, can you help us remember what the impact was on retention from that program?

Mike, could you help out with that?

Sure. In 2017, at the end of 2017, into 2018, we did have a fee credit program that represented less than 1% of the revenues. And we learned a lot from that program and we learned a lot about how our customers see these kind of programs and we learned a lot about the structure and how we wanted to the timing of when we get these amounts to them. So I would say that this is quite a different program in its simplicity of design, in the amount we are giving to each customer and how it's meaningful and how we are approaching the conversation with them. So whereas we got some reward from the prior program, we see the effectiveness of this one being very different.

David, the answer is, I will be excited to give you the result for the end of the year for the program in the next earnings call. So we will know at that point in a much more definitive fashion. As I said in the prepared remarks, I am really pleased with the feedback and the update. But as you say, in the end, the retention, particularly the start of 2021 is a significant issue and I believe we are addressing it in the absolute proper manner. We didn't take these dollars and put it towards new sales. We are rewarding our customers.

Right. And then just one last thing, just really on kind of the ability to expand geographically. How could something like the pandemic impact the carriers' willingness to work with a new PEO in a new geography? Or is there really now change at all? It really does not have any impact?

Yes. I am not real focused on the other PEOs, to tell you the truth. So I am not sure I can answer the question, David.

Yes. It's really directed at you. I just wondered about it.

Okay. I don't think, I would say from my experience, it does not have a bearing on carriers, especially with the amount of plans that we have. I am not looking for massive expansion into new plans. And our scale provides a tremendous, that scale is tremendous. I think it's a good question for the carriers. But I just don't know the answer to that. We have a great relationship with our carriers. As you know, we are a large partner to many of those. I am dealing directly at the very senior levels. And I haven't heard anything like that.

All right. Good enough. Thanks for the answers. I appreciate it. Good luck.

Thank you, David. Yes.

And ladies and gentlemen, this will conclude our question-and-answer session for today's conference. We would like to thank you for attending today's presentation. And at this time, you may now disconnect your lines and have a great day.