TriNet Group Inc. (NYSE:TNET), a provider of human resources solutions for small to medium-sized businesses (SMBs), plans to raise $240.0 million in its upcoming IPO.
The San Leanro, California-based firm will offer 15.0 million shares at an expected price range of $15-$17 per share. If the IPO can hit the midpoint of that range at $16 per share, TNET will command a market value of $1.2 billion.
TNET filed on November 21, 2013.
Lead Underwriters: Deutsche Bank Securities Inc., JP Morgan Securities LLC, Morgan Stanley & Co. LLC
Underwriters: Jefferies LLC, Stifel Nicolaus & Company Inc., William Blair and Co. LLC
TNET offers comprehensive human resource solutions for SMBs, essentially allowing them to outsource their HR functions to TNET. The firm's services are enabled by its proprietary cloud-based platform and include payroll processing, employment law compliance, benefits, and human capital consulting.
TNET's solutions allow its clients to utilize HR resources and provide benefits typically accessible only to much larger companies. The firm served over 8900 clients as of December 31, 2013, and processed over $17 billion in payroll and payroll tax payments for its clients. TNET primarily sells its services through a direct sales force.
TNET offers the following figures in its S-1 balance sheets for the year ended December 31, 2013:
Net Income: $13,147,000.00
Total Assets: $1,434,738,000.00
Total Liabilities: $1,705,100.00
Stockholders' Equity: ($393,240,000.00)
TNET has seen massive revenue growth, accompanied by variable income levels, in recent years. In 2011, 2012 and 2013, TNET's total revenues were $840.4 million, $1.0 billion, and $1.6 billion, respectively. Over the same periods, the firm posted net incomes of $14.8 million, $31.8 million, and $13.1 million, respectively.
TNET competes with both national and regional firms that offer similarly comprehensive HR packages, such as Automatic Data Processing Inc (NASDAQ:ADP) and Insperity Inc. (NYSE:NSP). TNET also competes with smaller, more specialized firms that provide one or more of the services included in TNET's solution.
President and CEO Burton M. Goldfield joined TriNet in 2008. He previously served as CEO of Ketera Technologies Inc., and as Senior Vice President of Worldwide Field Operations at Hyperion Solutions Corporation. He also served in various management positions with Rational Software Corporation. Mr. Goldfield received a B.S. in biomedical engineering from Syracuse University and an M.B.A. from Villanova University.
We're optimistic on this IPO and rate it a buy in the proposed range.
Though signs of an impending tech correction may put something of a damper on the offering, TNET is expanding its revenues at a full gallop, nearly doubling total revenues over a span of two years.
The firm has impressively managed to turn profits throughout this period of revenue growth. As healthcare and other benefits regulations become increasingly difficult to navigate, we suspect that many SMBs may be attracted to the type of solution that TNET offers.
The firm's experienced executive team should be able to continue to manage the firm's explosive growth effectively and efficiently.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TNET over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.