Mark Marcon • Robert W. Baird & Co.

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CFO & COO Brian Scott quantified the international revenue decline from a peak of ~$225M in 2023 to a current run-rate of ~$125M. President & CEO Cary Grace clarified the $5M labor disruption guidance is what they have line-of-sight to, with potential upside in Q3 and Q4. She noted pricing has been competitive for years and confirmed no other divestitures are planned. Scott projected the revolver balance would be around $30M by the end of Q3.

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President and CEO Cary Grace characterized the new MSP/VMS wins as small to medium but from significant clients, reflecting a strategic push initiated over a year ago. Regarding Language Services, she acknowledged that industry consolidation has increased price competition but stated AMN is well-positioned with its high-quality solutions. CFO and COO Brian Scott added that internal cost efficiencies are expected to help stabilize margins. Grace confirmed that Travel Nurse bill rates have stabilized since the second half of 2024, noting the premium over permanent labor costs is currently below pre-pandemic levels, suggesting potential for future increases.

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CFO and COO Brian Scott projected Q1 VMS revenue to be just under $20 million, which he expects to be a low point. CEO Caroline Grace stated that about 80% of nurse demand is now from non-MSP sources, a key growth area. On competition, she noted that while winning new clients is still very competitive, suppliers are acting rationally by not filling unprofitable orders, which positions AMN's integrated solutions favorably.

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President and CEO Cary Grace stated that the core Nurse and Allied Q4 outlook is flat to down low-single digits, excluding strike impacts. She noted signs of market stabilization but also an uptick in unfilled orders, indicating a competitive environment. She confirmed AMN is in a net win position for MSPs year-to-date and has embedded capacity in the international nurse business. Executive Randle Reece added that they see a path to resuming sequential growth in VMS revenue sometime next year.

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CEO Chad Richison detailed that the iWant rollout began on July 31, with plans to activate all clients by the end of the current quarter. He emphasized that activation is simple and requires minimal client effort, positioning it as a 'reward' for customers. He noted that while users can still navigate the old way, most adopt iWant quickly. The national advertising will continue to focus on full solution automation, with iWant presented as the primary way to access that value.

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CEO Chad Richison highlighted a "reconstitution" of sales training that began last year, focusing on fundamental "blocking and tackling," which has led to meaningful increases in both book sales and new logo units. He attributed margin strength to the automation of internal back-end tasks and the removal of product usage barriers for clients, which improves both the client experience and internal efficiency.

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CEO Chad Richison highlighted record sales months and a strategic shift toward larger clients, noting 12% growth in the segment with over 1,000 employees. Retiring CFO Craig Boelte explained that gross margin was temporarily impacted by a new building but will improve, while the company continues to invest in R&D and seek efficiencies elsewhere.

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CEO Chad Richison explained that product automation, exemplified by GONE, is a key sales driver. He noted GONE is included in an existing module and helps shift the value proposition to the system doing more for the client. He reiterated that sales execution is strong, with elevated unit counts and a record sales month in September.

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Chairman & CEO David Ossip confirmed no new update on the U.S. Federal contract but highlighted the Canadian government's selection of Dayforce. On AI, he noted a tremendous opportunity to increase the average PEPM (currently ~$13) by selling into the base, with data and AI offerings representing a potential $10 PEPM uplift. He mentioned a roadmap of over 30 AI agents and strong current attachment rates for AI-powered modules like Learning and Analytics.

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CFO Jeremy Johnson explained that the cadence is influenced by seasonality, particularly from year-end services which affect the Q1 to Q2 comparison for Dayforce recurring revenue. He also noted that while professional services revenue growth was exceptionally strong in Q1 at nearly 50%, it is expected to moderate in Q2, though still grow faster than recurring revenue. The ongoing decline in 'other recurring' revenue also contributes to the quarterly dynamics.

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CEO David Ossip attributed the sales momentum to the Discover conference accelerating deals, a more optimistic macro environment, and strong sales execution. President & COO Steve Holdridge stated they expect no impact on the Government of Canada contract from political changes. Regarding competition, David Ossip noted that Dayforce now competes mostly against ERPs and is taking share from its primary historical competitor.

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CEO David Ossip described a significant hospitality win as a 12-to-1 system simplification against a payroll-focused competitor and an ERP, emphasizing Dayforce's compliance capabilities as a key differentiator. He attributed the 25% lengthening in deal cycles to moving upmarket with larger, full-suite deals that require more sign-offs, and increased customer diligence in the current macroeconomic environment.

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Executive Chairman Steve Beauchamp reported positive early feedback, emphasizing the value of an integrated platform. He noted that while the sales cycle may be longer due to a higher price point, the long-term goal is a 10-20% penetration rate. He clarified that pricing is typically on a PEPM basis for expense management, with other modules priced per employee per user.

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Executive Chairman Steven Beauchamp reported that the Airbase product is resonating well and performing slightly ahead of plan, with the larger opportunity to come from phased platform integration. President and CEO Toby Williams noted that Paylocity's consistent, non-competitive partnership strategy with brokers has resonated particularly well recently, positioning the company as a 'steady hand' amidst industry consolidation.

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President and CEO Toby Williams noted that the market has become more stable compared to last year's longer sales cycles, leading to strong execution. Executive Chairman Steven Beauchamp added that both Headcount Planning and Benefit Decision Support are off to a good start, with positive feedback from existing customers, and are on track to meet long-term penetration goals.

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Executive Chairman Steven Beauchamp noted that while direct client exposure is limited, the conceptual value is understood, and feedback from mutual customers is very positive. CFO Ryan Glenn highlighted that margin leverage is expected to come from gross margin and G&A, consistent with Q1's performance, where adjusted EBITDA margin ex-float expanded by 270 basis points.

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James Allison, EVP & CFO, clarified that pricing increases are the primary method to address cost trends, while plan design changes and carrier negotiations aim to mitigate the overall trend's impact. Paul Sarvadi, Chairman & CEO, emphasized that contract discussions with UHC are critical for structural changes to protect against future volatility. Regarding Workday, Mr. Sarvadi confirmed a multi-wave beta rollout and noted that while initial onboarding will require investment, expenses should become capitalizable and will be offset by new revenue streams, including implementation fees.

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Executive Paul Sarvadi stated that pricing adjustments have already begun and are timed well, as over 85% of the client base renews throughout the remainder of the year, with a goal to rebalance price-to-cost by January. He noted that cost and hiring trends were a nationwide issue rather than regional. He also explained that the new Workday go-to-market plan includes a dedicated product-oriented delivery team that will manage lead generation, with an effective start date around July 1.

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CEO Paul Sarvadi explained that the Workday go-to-market plan is progressing well, with incentive structures now in place to drive lead flow, and noted the partnership has already tangibly improved large client retention. CFO Jim Allison stated that Workday-related operating costs would be relatively steady throughout 2025, with 2026 spending dependent on the official launch date. Sarvadi added that the company's pricing is strong and competitive, even with higher anticipated medical cost trends.

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CFO Jim Allison explained that healthcare trends are at the higher end of the historical range, driven by specialty drugs like GLP-1s and new high-cost treatments. He specified that Q3 saw a slight increase in utilization, but severity was in line with expectations, and this was anticipated in their pricing strategy. CEO Paul Sarvadi added that he is confident they will be actively selling and demoing the Workday solution during the fall 2025 selling season and that the joint go-to-market plan is being integrated into both companies' 2025 business plans to accelerate lead sharing.

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CEO Carl Hess explained that WTW has used AI for years, providing the 'Coverage Clarified' tool as an example that boosts efficiency by up to 40%, and stated they see long-term benefits for growth and margins. President of Health, Wealth & Career Julie Gebauer addressed the Health outlook, stating that cost drivers are persistent, which will necessitate ongoing client focus on cost management, supporting the company's expectation for long-term high single-digit growth in the business.

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President & CEO Maria Black and CFO Peter Hadley reported that the Workforce Software integration is proceeding ahead of expectations, already contributing to bookings and being co-sold with ADP's Lyric and GlobalView platforms. They also noted that Workforce Now NextGen is being rolled out more broadly, with strong client satisfaction scores and improved implementation experiences, contributing to their confidence in fiscal 2026 bookings.

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CEO Maria Black stated that demand feels solid across segments as HCM is not discretionary. CFO Don McGuire added that PEO bookings and worksite employee growth were good. Regarding products, Maria Black reported that the Workforce Software integration is proceeding 'incredibly well' and that ADP Lyric is resonating strongly with enterprise clients, driving significant new business.

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CEO Maria Black expressed a vision for the Fiserv partnership to become a meaningful distribution channel, comparable to their bank and accountant channels, and was open to future expansion beyond small business. Regarding WorkForce Software, she stated that integration planning is on track after 100 days, with a focus on go-to-market alignment now and deeper product integration to follow, which will be critical for their enterprise and global offerings alongside Lyric.

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CEO Maria Black attributed the record first-quarter client satisfaction (NPS) to investments in product and service tools, with notable year-over-year improvements in the mid-market, enterprise, and HR outsourcing businesses. Regarding WorkForce Software, she explained the plan is to integrate its offerings into ADP's global and enterprise go-to-market strategy, creating a powerful combination with the new ADP Lyric platform to target the global MNC space.

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President & CEO Joe Liberatore stated that most AI-related work remains foundational, focusing on data, governance, and cloud readiness. COO David Kelly clarified that recent project ends were due to clients reallocating budgets to other tech initiatives, not reducing overall spend, and described the demand environment as stable. Kelly also characterized the pipeline as strong, with growing demand for data and digital projects. Both executives asserted that clients are actively modernizing legacy systems to prepare for AI, viewing it as essential work rather than something to delay.

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COO David Kelly confirmed a stable environment with no significant project cancellations, though new project acceleration is delayed. CFO Jeff Hackman stated the Q2 guidance assumes stability and noted that delivery headcount has already been reduced by nearly 40% over several years. CEO Joseph Liberatore added that Kforce's focus on mission-critical projects provides a buffer. Regarding margins, Hackman highlighted stable bill-pay spreads and a beneficial mix from higher-margin solutions work, with Kelly adding that clients are not demanding wholesale price cuts.

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COO David Kelly and Executive Joseph Liberatore addressed the demand questions, noting that while AI-related data cleanup is a growing topic, it's not yet a majority of the business. They explained that clients are seeking predictability and stability to unlock pent-up project demand. Kelly detailed that the India development center was driven by client demand for blended-cost models and is built for flexible scaling. He also stated that potential immigration policy changes are not a great concern and could be an advantage due to Kforce's compliance strengths. CFO Jeff Hackman confirmed that the guidance for 100 basis points of enhanced operating leverage is relative to the 2022 peak.

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CFO Jeff Hackman attributed the margin improvement primarily to better bill-pay spreads sequentially, with favorable health insurance costs also contributing year-over-year. CEO Joseph Liberatore stated that increased client confidence is the main catalyst needed to unlock spending and that the India center will allow Kforce to directly service clients who prohibit third-party offshore partners. COO David Kelly added that the India facility will ramp slowly in 2025 and will not have a meaningful impact on the typical Q1 margin seasonality.

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President & CEO M. Keith Waddell explained that Protiviti's Q3 outlook is impacted by a few large projects ending, but noted the pipeline remains strong with a recent surge in new opportunities. He also confirmed that the tech solutions practice is very strong, driven by AI readiness and modernization, and expects that strength to benefit higher-level finance and accounting consulting.

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Executive M. Waddell detailed Protiviti's service lines, categorizing them by their discretionary nature, and noted that while pipelines are strong, project conversion times have lengthened. He explained that profitability is expected to improve sequentially due to better staff utilization. Waddell also reaffirmed a strong, long-term commitment to returning cash to shareholders, stating the company intends to not only maintain but continue increasing its dividend, dismissing any notion of a cut.

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Executive M. Waddell explained that Q4 Protiviti results were impacted by holiday-related client soft closes and contract signing delays, but underlying momentum remains strong. Regarding the NFIB index, Waddell noted that current conditions like job openings and unemployment are more favorable than in past recoveries. He stated that AI is not having a meaningful impact and that the company plans to maintain current internal staffing levels, consistent with trough margins in prior cycles which are expected to recover.

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CEO M. Waddell explained that Protiviti's Q4 guidance is cautious due to a couple of large projects winding down and the typical holiday slowdown. He noted that price competition from the Big 4 has leveled off and highlighted Protiviti's effective use of contractors as a key advantage. For seasonality, he stated Q1 is typically Protiviti's lowest profitability quarter due to seasonal revenue dips and annual salary increases, while Talent Solutions sees flat same-day contract revenue and a perm placement step-up.

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Chairman & CEO Jonas Prising stated that Northern Europe's recovery depends on an improved economic environment and resolution of geopolitical uncertainties, noting they have taken significant restructuring actions. EVP & CFO Jack McGinnis added that the region's profitability can align with the company average during growth periods. Regarding France, McGinnis noted that trends stabilized and came in better than expected, with the Q3 guide reflecting a slightly improved rate of decline.

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CEO Jonas Prising stated that European clients are in a 'wait-and-see' mode, largely believing the tariffs are a negotiation tactic that will result in a manageable settlement. CFO Jack McGinnis detailed the $15.8 million in Q1 restructuring charges, primarily in the Nordics, Belgium, and the U.K., with an expected payback of about nine months. McGinnis also confirmed the French tax is enacted as a one-year measure for 2025 and noted that permanent recruitment was 16.4% of gross profit in Q1.

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Chief Executive Officer Jonas Prising stated that U.S. optimism has not yet led to a meaningful change in employer demand, though the Manpower U.S. brand's return to growth is a positive sign. He described Europe's challenges, particularly in the North, and noted that potential catalysts include rate cuts and reduced inflation. Regarding dispositions, Prising explained it's part of an ongoing portfolio optimization strategy based on value creation and risk assessment. Chief Financial Officer John McGinnis added that potential French tax hikes are not yet in their guidance.

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CEO Jonas Prising identified macroeconomic improvement, like recent ECB rate cuts, as the primary catalyst for Northern Europe, while noting the company is focused on sales activity and cost controls. CFO John McGinnis characterized the French tax proposal as a likely temporary measure for 2024-2025, with more clarity expected by year-end.

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President & CEO John Gibson explained that the company made a strategic decision to complete all disruptive sales integration activities in Q4 to ensure a clean start to the new fiscal year. He highlighted immediate cross-sell successes, including a PEO referral and a large ASO client win. CFO Bob Schrader added that the Q4 revenue miss was due to a slight delay in the Paycor deal closing, not sales disruption, and that Q1 guidance reflects the back-half weighted growth expected in the PEO segment.

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Executive Robert Schrader clarified that adjustments for accretion will exclude amortization of intangibles, converted stock-based compensation from the deal, and one-time transaction costs. CEO John Gibson stated that while the team is increasingly confident in revenue synergies, the primary focus has been on cost synergies and integration planning, with more details on revenue to come post-close. Schrader added that the base Paychex business plan for next year should align with current consensus expectations.

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CEO John Gibson stated that while post-election optimism has improved, it has not yet translated into significant changes in the moderate growth environment. He attributed the PEO business's success and market share gains to its broad suite of products, the flexibility provided by its embedded insurance agency, and strong client retention, which allows clients to grow and change their needs without leaving the Paychex ecosystem.

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CEO John Gibson explained that while moderate growth is consistent across segments, the demand for efficiency and HR outsourcing is strong. He emphasized that new products are designed to bring enterprise-level tools to all business sizes to solve key problems like recruiting and offering affordable benefits. Gibson noted these tools are designed to attract new clients and improve retention, with a significant marketing push planned for the selling season.

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CEO Gary Burnison explained the Talent Suite aims for seamlessness across the talent lifecycle and that clients now seek leaders who can 'embrace ambiguity' amid profound change. He attributed strong global search growth to both strategy and market factors like demographics and burnout. CFO Robert Rozek detailed the balanced capital allocation strategy, prioritizing reinvestment, M&A, and shareholder returns via dividends and buybacks.

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CEO Gary Burnison described the large engagements as high-impact workforce transformations, often won against strategy firms and the Big 4, which have driven the consulting backlog to an all-time high. In the Interim segment, he noted the best success is at the higher end, while contingent placement is less strategic. For risk indicators, Burnison identified the 'cost of living crisis' as the primary macro concern, while Executive Robert Rozek added that he monitors daily new business volumes as a key tactical indicator.

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Executive Gary Burnison attributed margin strength to strategic decisions made 15 months prior to focus on profitability and actively manage the workforce, noting this was the primary driver over cost-cutting. He confirmed the Korn Ferry brand provides a "very powerful" lift to the interim business, driving higher bill rates and referrals. On consulting, he noted softness in DE&I but strength in large leadership development deals. The new Talent Suite aims to shift clients to a single subscription model integrated with major HCM providers. Regarding the election, he anticipates no material short-term labor market changes but acknowledged long-term optimism around reduced regulation.

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CEO Ted Hanson attributed the gross margin strength to a favorable mix shift towards higher-margin commercial consulting and the value of new capabilities like TopBloc and AI services. He highlighted the company's variable SG&A cost structure as a key stabilizer. President Sadasivam Iyer added that clients continue to invest in strategic areas like AI and cybersecurity, though Hanson noted a general 'wait-and-see' attitude from clients on broader IT spending due to macro uncertainty.

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CEO Theodore Hanson stated that the company has ample capacity to handle increased demand, as evidenced by strong Q4 bookings, and that a commercial recovery would improve margin mix. On TopBloc, he confirmed it serves diverse industries with a full suite of Workday Finance and HR solutions and has a growing recurring revenue stream. He also noted that services have historically not been subject to tariffs, mitigating near-term risk for their nearshore operations.

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Executive Theodore Hanson noted that while M&A flow is increasing slightly, there are not enough data points to confirm more reasonable pricing. He expects recent federal wins to materially impact revenue more in 2025 than Q4 2024. Executive Randolph Blazer added that while they track AI-prep versus pure AI work, data-related services currently constitute a much larger portion of revenue.

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President and CEO Scott Cutler emphasized that the company's top priority is delivering a 'remarkable experience' and that the team works to make things right when issues arise. He stated that despite the challenges, client retention results remain strong and unchanged, in the 'high 90s'.

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CEO Jon Kessler expressed confidence in HSA retention heading into fiscal 2026. He indicated that on the CDB side, price increases might lead to some "healthy churn," which would support margin expansion. He asserted that the fraud incidents did not materially impact the sales cycle or retention, though they did increase the team's workload.

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President and CEO Jon Kessler stated that nothing has changed their commitment to the long-term goal, citing strong underlying business performance as a positive offset to the pace of interest rate declines. Vice Chair Dr. Steve Neeleman addressed the political question by highlighting recent bipartisan support for HSAs, such as the HOPE Act, suggesting that the accounts have broad appeal and that legislation can move forward regardless of the election outcome.

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