Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

dcfb14cb509a8147a276aeb85795811b780c87795ebdd1edd861b809581e390c

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

5320bc03f2344b981c00fac0394da96ae21425203c7520460fb5b0df89fea3e2

| Metric [USD Million] | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Employer Services    | N/A     | **3,218.6**  **[0000008670-24-000017_q4fy24exhibit99.htm:6]**  | **3,590.7**  **[0000008670-24-000014_adp-20240331.htm:27]**  | **3,125.2**  **[0000008670-24-000007_adp-20231231.htm:28]**  | **3,046.4**  **[0000008670-23-000033_q1fy24exhibit99.htm:6]**  | **3,021.3**  **[0000008670-23-000019_q4fy23exhibit99.htm:6]**  | **3,339.1**  **[0000008670-23-000010_q3fy23exhibit99.htm:0]**  | **2,891.9**  **[0000008670-23-000002_q2fy23exhibit99.htm:6]**  |
| PEO Services         | N/A     | **1,552.3**  **[0000008670-24-000017_q4fy24exhibit99.htm:6]**  | **1,665.6**  **[0000008670-24-000014_adp-20240331.htm:27]**  | **1,546.1**  **[0000008670-24-000007_adp-20231231.htm:28]**  | **1,469.6**  **[0000008670-23-000033_q1fy24exhibit99.htm:6]**  | **1,459.5**  **[0000008670-23-000019_q4fy23exhibit99.htm:6]**  | **1,592.0**  **[0000008670-23-000010_q3fy23exhibit99.htm:0]**  | **1,503.3**  **[0000008670-23-000002_q2fy23exhibit99.htm:6]**  |
| Other                | N/A     | **-2.4**  **[0000008670-24-000017_q4fy24exhibit99.htm:6]**     | **-2.5**  **[0000008670-24-000014_adp-20240331.htm:27]**     | **-3.3**  **[0000008670-24-000007_adp-20231231.htm:28]**     | **-3.6**  **[0000008670-23-000033_q1fy24exhibit99.htm:6]**     | **-3.0**  **[0000008670-23-000019_q4fy23exhibit99.htm:6]**     | **-3.3**  **[0000008670-23-000017_adp-20230331.htm:5]**     | **-4.2**  **[0000008670-23-000002_q2fy23exhibit99.htm:6]**  |
| Total Revenue        | **4,800**  **[0000008670-24-000026_q1fy25exhibit99.htm:0]**  | **4,768.5**  **[0000008670-24-000017_q4fy24exhibit99.htm:6]**  | **5,253.8**  **[0000008670-24-000014_adp-20240331.htm:27]**  | **4,668.0**  **[0000008670-24-000007_adp-20231231.htm:28]**  | **4,512.4**  **[0000008670-23-000033_q1fy24exhibit99.htm:6]**  | **4,477.8**  **[0000008670-23-000019_q4fy23exhibit99.htm:6]**  | **4,927.8**  **[0000008670-23-000010_q3fy23exhibit99.htm:0]**  | **4,391.0**  **[0000008670-23-000002_q2fy23exhibit99.htm:6]**  |

eb2925849354e46394df23e91343d9b3d886f3cef6f781adc3a1e5b7ab86b5f7

21a17eb355b3d041f62f7b08d052887582a5187f4218838a104f4143ff15b92b

| Metric (Unit) | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 |
|---------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Pays per Control (Growth %) | **2%**  **[ADP_3404620_3]** **[0000008670-24-000026_q1fy25exhibit99.htm:1]** **[0000008670-24-000030_adp-20240930.htm:22]**  | **2%**  **[0000008670-24-000017_q4fy24exhibit99.htm:1]** **[0000008670-24-000024_adp-20240630.htm:49]**  | **2%**  **[ADP_3381814_4]** **[0000008670-24-000009_q3fy24exhibit99.htm:0]**  | **2%**  **[ADP_3371354_4]** **[0000008670-24-000002_q2fy24exhibit99.htm:0]** **[0000008670-24-000002_q2fy24exhibit99.htm:6]**  | **2%**  **[0000008670-23-000040_adp-20230930.htm:19]** **[0000008670-23-000033_q1fy24exhibit99.htm:0]**  | **3%**  **[0000008670-23-000019_q4fy23exhibit99.htm:1]**  | **4%**  **[0000008670-23-000010_q3fy23exhibit99.htm:0]**  | **5%**  **[ADP_3158052_0]** **[0000008670-23-000002_q2fy23exhibit99.htm:0]**  |
| PEO Average Worksite Employees (Count) | **737,000**  **[0000008670-24-000026_q1fy25exhibit99.htm:1]** **[0000008670-24-000030_adp-20240930.htm:22]**  | **742,000**  **[ADP_3395260_5]** **[0000008670-24-000017_q4fy24exhibit99.htm:1]**  | **732,000**  **[0000008670-24-000009_q3fy24exhibit99.htm:0]**  | **725,000**  **[0000008670-24-000002_q2fy24exhibit99.htm:0]** **[0000008670-24-000002_q2fy24exhibit99.htm:6]**  | **717,000**  **[0000008670-23-000033_q1fy24exhibit99.htm:0]** **[0000008670-23-000033_q1fy24exhibit99.htm:6]**  | **722,000**  **[ADP_3327940_4]** **[0000008670-23-000019_q4fy23exhibit99.htm:1]**  | **710,000**  **[0000008670-23-000010_q3fy23exhibit99.htm:0]** **[0000008670-23-000010_q3fy23exhibit99.htm:6]**  | **711,000**  **[0000008670-23-000002_q2fy23exhibit99.htm:0]** **[0000008670-23-000002_q2fy23exhibit99.htm:6]**  |

f91eb219e392405fadc97e4eb02cc865d08d550c5ea49e2643b60112a2cf33aa

79238918a5ebf675e5d7d55d14368d0a88cb2d66a7d3e22c4b135db433d0e91a

1. With the sizeable acquisition of WorkForce Software, how do you plan to integrate their offerings without complicating your existing platform ecosystem, and are there risks that this could potentially confuse your go-to-market strategy, especially since you have spent the last decade reducing platform complexity?  **[ADP_3404620_11]** **[ADP_3404620_1]** **[ADP_3404620_10]** 

2. Given that new business formations are down year-on-year and fiscal year-to-date, how do you plan to sustain growth in the small business segment, and what strategies do you have in place to mitigate the potential slowdown in small business demand?  **[ADP_3404620_18]** 

3. You mentioned that PEO pays per control growth is expected to be softer than Employer Services; with further deceleration observed, what concrete steps are you taking to bolster growth in the PEO segment, and how confident are you in achieving your PEO targets for the year?  **[ADP_3404620_26]** **[ADP_3404620_9]** 

4. Considering that the Employer Services retention rate declined slightly, despite record client satisfaction scores, what factors led to this slight decrease in retention, and how are you addressing any underlying issues to ensure retention rates improve?  **[ADP_3404620_1]** 

5. With the issuance of $1 billion of notes at 4.75% to finance the $1.2 billion acquisition, how will the additional interest expense impact your earnings going forward, and are you concerned about the increased leverage on your balance sheet?  **[ADP_3404620_23]** 

dfe6262aa62a74a14173cd05d827c624e676527d82a2c740785d0537ff0ee5cf

| Name             | Position                                                                 | Start Date          | Short Bio                                                                                                                                                                                                                                                                                                                                                   |
|------------------|--------------------------------------------------------------------------|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| John Ayala       | Chief Operating Officer (stepping down)                                  | January 2022        | John Ayala joined ADP in **2002**. He has served in various roles, including President, Employer Services North America, and President, Major Account Services and ADP Canada. He was appointed Chief Operating Officer in January 2022. Ayala will be stepping down from his role as Chief Operating Officer effective January 1, 2025  **[0000950142-24-002701_eh240554372_8k.htm:1]** **[0000008670-24-000024_adp-20240630.htm:114]** **[0000008670-23-000030_adp-20230630.htm:109]** .              |
| Maria Black      | President and Chief Executive Officer                                    | January 2023        | Maria Black is the **President and Chief Executive Officer** of ADP. She has been with ADP since **1996**. Before her current role, she served as President of the company from January 2022 to December 2022, and held various leadership positions, including President of Worldwide Sales and Marketing  **[0000008670-24-000024_adp-20240630.htm:114]** **[0000008670-23-000030_adp-20230630.htm:109]** **[0001308179-24-000714_adp4345811-def14a.htm:27]** **[0001308179-23-000987_adp4229101-def14a.htm:28]** .                                      |
| Paul Boland      | Chief Human Resources Officer                                            | June 2023           | Paul Boland joined ADP in **2017**. Before his appointment as Chief Human Resources Officer, he served as Interim Chief Human Resources Officer and held various HR leadership roles within the company  **[0000008670-24-000024_adp-20240630.htm:114]** **[0000008670-23-000030_adp-20230630.htm:109]** .                                                                                                                                            |
| Michael A. Bonarti| Chief Administrative Officer                                             | July 2021           | Michael A. Bonarti joined ADP in **1997**. He was appointed as Chief Administrative Officer in July 2021, after serving as Corporate Vice President, General Counsel, and Secretary  **[0000008670-24-000024_adp-20240630.htm:114]** **[0000008670-23-000030_adp-20230630.htm:109]** .                                                                                                                                                                 |
| Chris D'Ambrosio | Chief Strategy Officer                                                   | June 2021           | Chris D'Ambrosio joined ADP in **2014**. He was appointed as Chief Strategy Officer in June 2021, having previously served as Senior Vice President, General Manager, Insurance Services, Small Business Services  **[0000008670-24-000024_adp-20240630.htm:114]** **[0000008670-23-000030_adp-20230630.htm:109]** .                                                                                                                                   |
| Joe DeSilva      | President, Global Sales                                                  | January 2022        | Joe DeSilva joined ADP in **2003**. He was appointed as President, Global Sales in January 2022, and previously served as President, Small Business Services, Retirement Services, and Insurance Services  **[0000008670-24-000024_adp-20240630.htm:115]** **[0000008670-24-000024_adp-20240630.htm:114]** .                                                                                                                                            |
| Sreeni Kutam     | President, Global Product and Innovation                                 | January 2023        | Sreeni Kutam joined ADP in **2014**. Before his current role, he served as Chief Human Resources Officer and held various HR leadership roles within the company  **[0000008670-24-000024_adp-20240630.htm:115]** **[0000008670-24-000024_adp-20240630.htm:114]** .                                                                                                                                                                                    |
| David Kwon       | Chief Legal Officer/General Counsel                                      | July 2021           | David Kwon joined ADP in **2011**. He was appointed as Corporate Vice President, Chief Legal Officer/General Counsel in July 2021, after serving in various legal roles within the company  **[0000008670-24-000024_adp-20240630.htm:115]** **[0000008670-23-000030_adp-20230630.htm:110]** .                                                                                                                                                          |
| Jonathan Lehberger| Corporate Controller and Principal Accounting Officer                    | July 2024           | Jonathan Lehberger joined ADP in **2004**. He was appointed as Corporate Controller and Principal Accounting Officer in July 2024, having previously served as Senior Vice President, Financial Strategy and Planning  **[0000008670-24-000024_adp-20240630.htm:115]** .                                                                                                                                  |
| Don McGuire      | Chief Financial Officer                                                  | October 2021        | Don McGuire joined ADP in **1998**. He was appointed as Chief Financial Officer in October 2021, after serving as President, Employer Services International and other leadership roles  **[0000008670-23-000030_adp-20230630.htm:110]** **[0000008670-24-000024_adp-20240630.htm:115]** .                                                                                                                                                             |
| Joseph DeSilva   | Executive Vice President, North America and Chief of Operations (future) | January 1, 2025     | Joseph DeSilva joined ADP in **2003**. Prior to his upcoming role as Executive Vice President, North America and Chief of Operations effective January 1, 2025, he served as President, Global Sales since January 2022  **[0000950142-24-002701_eh240554372_8k.htm:1]** **[0000008670-24-000024_adp-20240630.htm:115]** .                                                                                                                             |

5666ac690c9e18378772b7e8779fe38063ad575a83b0d108f51e8755b8fb70b3

ca664cc156f9255023d9fa8a8cb0e1a0d20713e20da44ca562bd0a60f76663ed

- Total Revenue: $5,048.4 (+8% YoY)  **[0000008670-24-000007_adp-20231231.htm:1]** **[0000008670-25-000003_q2fy25exhibit99.htm:3]**   
- Employer Services: $3,388.5 (+8% YoY)  **[0000008670-24-000007_adp-20231231.htm:28]** **[0000008670-24-000007_adp-20231231.htm:5]** **[0000008670-25-000007_adp-20241231.htm:23]**   
- PEO Services: $1,663.3 (+8% YoY)  **[0000008670-24-000007_adp-20231231.htm:28]** **[0000008670-24-000007_adp-20231231.htm:5]** **[0000008670-25-000007_adp-20241231.htm:23]**   
- Interest on Funds Held for Clients: $272.8 (**+21%** YoY)  **[0000008670-24-000007_adp-20231231.htm:28]** **[0000008670-24-000007_adp-20231231.htm:5]** **[0000008670-25-000007_adp-20241231.htm:5]**   
- Operating Income (EBIT): $1,399.1 (**+48%** YoY)  **[0000008670-24-000007_adp-20231231.htm:1]** **[0000008670-25-000003_q2fy25exhibit99.htm:3]**   
- Net Income: $963.2 (+10% YoY)  **[0000008670-24-000007_adp-20231231.htm:1]** **[0000008670-25-000003_q2fy25exhibit99.htm:3]**   
- Diluted EPS: $2.35 (+11% YoY)  **[0000008670-24-000007_adp-20231231.htm:1]** **[0000008670-25-000003_q2fy25exhibit99.htm:3]**   

e4763f7ae7b3552329afe36b622994d8d5c8068705c4d4572fdcd64204ba352b

United States

Europe

Canada

Other

Total Revenue

c2da14aa3afcfd20608f644ac373939681955bf01caf9ba2a3b0a563a5b4a62b

### Q1 2025 Earnings Call
- **Issued Period**: Q1 2025
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Employer Services (ES) Revenue Growth**: 6% to 7%
  2. **Employer Services (ES) Full Year Growth Guidance**: 4% to 7%
  3. **Employer Services (ES) Retention**: 10 to 30 basis point decline
  4. **Employer Services (ES) Pays Per Control Growth**: 1% to 2%
  5. **Client Funds Interest Revenue**: Reduced by $10 million
  6. **Employer Services (ES) Margin**: Increase of 40 to 60 basis points
  7. **Professional Employer Organization (PEO) Revenue Growth**: 5% to 6%
  8. **Professional Employer Organization (PEO) Average Worksite Employee Growth**: 2% to 3%
  9. **Professional Employer Organization (PEO) Margin**: Down 70 to 90 basis points
  10. **Consolidated Revenue Growth**: 6% to 7%
  11. **Adjusted EBIT Margin Expansion**: 30 to 50 basis points
  12. **Corporate Interest Expense**: Increase by about $40 million
  13. **Effective Tax Rate**: Around 23%
  14. **Adjusted EPS Growth**: 7% to 9%  **[ADP_3404620_3]** .

### Q4 2024 Earnings Call
- **Issued Period**: Q4 2024
- **Guided Period**: FY 2025
- **Guidance**:
  1. **Client Funds Balances**: 3% to 4% growth
  2. **Client Funds Interest Revenue**: $1.13 billion to $1.15 billion
  3. **Net Impact from Client Fund Strategy**: $1 billion to $1.02 billion
  4. **Employer Services (ES) Margin**: Increase 100 to 120 basis points
  5. **PEO Revenue Growth**: 4% to 6%, excluding zero margin pass-throughs 3% to 4%
  6. **PEO Margin**: Decrease 90 to 110 basis points
  7. **Consolidated Revenue Growth**: 5% to 6%
  8. **Adjusted EBIT Margin Expansion**: 60 to 80 basis points
  9. **Effective Tax Rate**: Around 23%
  10. **Adjusted EPS Growth**: 8% to 10%
  11. **ES Revenue Growth**: 5% to 6%
  12. **ES New Business Bookings Growth**: 4% to 7%
  13. **ES Retention**: Decline 10 to 30 basis points from 92%
  14. **Pays Per Control Growth**: 1% to 2%
  15. **Price Contribution to ES Revenue Growth**: Closer to 100 basis points
  16. **FX Impact**: Transition from a modest tailwind to a slight headwind
  17. **Average Yield on Client Funds**: Increase from 2.9% to 3.1%  **[ADP_3395260_6]** **[ADP_3395260_5]** .

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024 and FY 2025
- **Guidance**:
  1. **Fiscal 2024 Consolidated Revenue Growth**: 6% to 7%
  2. **Adjusted EBIT Margin**: Increase 60 to 70 basis points
  3. **Effective Tax Rate**: Around 23%
  4. **Adjusted EPS Growth**: 10% to 12%
  5. **Employer Services (ES) Revenue Growth**: 7% to 8%
  6. **ES Margin Growth**: Increase 180 to 190 basis points
  7. **ES New Business Bookings Growth**: 4% to 7%
  8. **ES Retention**: 20 to 30 basis point decline
  9. **ES Pays Per Control Growth**: Around 2%
  10. **PEO Revenue Growth**: 3% to 4%
  11. **PEO Worksite Employee Growth**: 2% to 3%
  12. **PEO Margin**: Decrease 120 to 140 basis points
  13. **Client Funds Interest Revenue**: Revised outlook
  14. **Fiscal 2024 Average Client Funds Balance Growth**: About 3%  **[ADP_3381814_5]** **[ADP_3381814_4]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Revenue Growth**: 6% to 7%
  2. **Employer Services (ES) Revenue Growth**: 7% to 8%
  3. **PEO Revenue Growth**: 2% to 3%
  4. **Adjusted EBIT Margin**: Increase 60 to 70 basis points
  5. **Adjusted EPS Growth**: 10% to 12%
  6. **Employer Services Retention**: 40 to 60 basis point decline
  7. **Pays Per Control Growth**: 1% to 2%
  8. **Client Funds Interest Revenue**: $985 million to $995 million
  9. **PEO Margins**: Down 80 to 100 basis points
  10. **Effective Tax Rate**: Around 23%  **[ADP_3371354_4]** **[ADP_3371354_3]** .

bcc60902a8301968bf3539363240c3d5f3e48f6d3b366f00d4abd0ef1b191cd6

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

Pays per Control (Growth %)

PEO Average Worksite Employees (Count)

44340516ef83bc6e056ad53b7993ca887a7f32563c570301cd8d81e2c2879eda

| Program Details           | Program 1       |
|---------------------------|-----------------|
| Approval Date             | November 2022  **[0000008670-24-000030_adp-20240930.htm:38]**  |
| End Date/Duration         | No expiration date  **[0000008670-24-000030_adp-20240930.htm:38]**  |
| Total additional amount   | **$5 billion**  **[0000008670-24-000030_adp-20240930.htm:38]**  |
| Remaining authorization amount | **$2.706 billion**  **[0000008670-24-000030_adp-20240930.htm:38]**  |
| Details                   | The program was authorized to repurchase $5 billion of common stock. The purpose includes returning capital to shareholders and offsetting dilution from stock-based compensation, considering factors like acquisition activity and market conditions.  **[0000008670-24-000030_adp-20240930.htm:38]** **[0000008670-23-000040_adp-20230930.htm:35]** **[0000008670-24-000007_adp-20231231.htm:42]** **[0000008670-24-000014_adp-20240331.htm:41]**  |

64ca9425a204272f6fb1844812457771bebc1a46b13df8fcd22381f916af1a84

**Annual guidance for FY 2025:**

- **Employer Services (ES) Revenue Growth**: 6% to 7%  **[ADP_3404620_3]**  (raised from 5% to 6%  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Employer Services (ES) Full Year Growth Guidance**: 4% to 7%  **[ADP_3404620_3]**  (no prior guidance)  
- **Employer Services (ES) Retention**: 10 to 30 basis point decline  **[ADP_3404620_3]**  (no change from prior guidance  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Employer Services (ES) Pays Per Control Growth**: 1% to 2%  **[ADP_3404620_3]**  (no change from prior guidance  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Client Funds Interest Revenue**: Reduced by $10 million  **[ADP_3404620_3]**  (lowered from $1.13B–$1.15B  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Employer Services (ES) Margin**: Increase of 40 to 60 basis points  **[ADP_3404620_3]**  (lowered from 100 to 120 basis points  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Professional Employer Organization (PEO) Revenue Growth**: 5% to 6%  **[ADP_3404620_3]**  (raised from 4% to 6%  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Professional Employer Organization (PEO) Average Worksite Employee Growth**: 2% to 3%  **[ADP_3404620_3]**  (no prior guidance)  
- **Professional Employer Organization (PEO) Margin**: Down 70 to 90 basis points  **[ADP_3404620_3]**  (raised from down 90 to 110 basis points  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Consolidated Revenue Growth**: 6% to 7%  **[ADP_3404620_3]**  (raised from 5% to 6%  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Adjusted EBIT Margin Expansion**: 30 to 50 basis points  **[ADP_3404620_3]**  (lowered from 60 to 80 basis points  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Corporate Interest Expense**: Increase by about $40 million  **[ADP_3404620_3]**  (no prior guidance)  
- **Effective Tax Rate**: Around 23%  **[ADP_3404620_3]**  (no change from prior guidance  **[ADP_3395260_6]** **[ADP_3395260_5]** )  
- **Adjusted EPS Growth**: 7% to 9%  **[ADP_3404620_3]**  (lowered from 8% to 10%  **[ADP_3395260_6]** **[ADP_3395260_5]** )  

1eae40629a3a1d71134a3a0237e8356fa48c6c2982fd1ce290cffc615a4ffb6f

- ADP reported a **record first-quarter new business bookings in Employer Services**, with strong demand and healthy pipelines, supporting their 4% to 7% full-year growth guidance.  **[ADP_3404620_27]**
- The company expects **continued growth in PEO pays per control** this year, supported by strong PEO new business bookings which are outperforming due to strong execution and the increasing value of the PEO proposition.  **[ADP_3404620_26]** **[ADP_3404620_9]**
- The **acquisition of WorkForce Software** is expected to expand ADP's offerings in workforce management, tapping into a large total addressable market, and is anticipated to contribute significantly to revenue growth in fiscal 2025.  **[ADP_3404620_22]** **[ADP_3404620_6]**

13cf3abe2eae763ab291cf9eb1463ca100e3a7e5dcca87f06829b7f07381a570

- **ADP expects growth in PEO pays per control to be lower than Employer Services and experiencing softness**, forecasting PEO pays per control growth to be "softer than the 2% at the high end" expected for Employer Services.  **[ADP_3404620_26]**
- The acquisition of WorkForce Software is anticipated to cause near-term **adjusted EBIT margin pressure of approximately 50 basis points** and **EPS growth drag of more than 1%** in fiscal 2025 due to integration costs, amortization of intangibles, and interest expense. Additionally, **significant expense synergies are not expected** from this transaction, which may negatively impact profitability.  **[ADP_3404620_6]**
- ADP forecasts a **10 to 30 basis point decline in full-year retention rate**, partly due to expected higher out-of-business rates among small business clients, indicating potential churn and challenges in client retention within that segment.  **[ADP_3404620_13]**

c6255fb942384ae59f6965b5768c28761894ad735c812ac02c2179df7a5589d0

29584524a1b57fdb6c384cfe20a92c92ff2837d2987e8830eee065d3c227ca7e

Automatic Data Processing, Inc. (ADP) is a leading global provider of cloud-based Human Capital Management (HCM) technology solutions, offering both software and outsourcing services to help clients manage their workforce in a dynamic business and regulatory environment **[0000008670-24-000024_adp-20240630.htm:2]** **[0000008670-24-000007_adp-20231231.htm:24]**. ADP's business is structured around three core pillars: U.S. HCM Solutions, U.S. HR Outsourcing (HRO) Solutions, and Global Solutions **[0000008670-24-000024_adp-20240630.htm:2]**. The company sells a range of services that include managing the entire employment cycle, payroll administration, employee benefits management, and international HCM and HRO services **[0000008670-24-000024_adp-20240630.htm:2]**.

1. **Human Capital Management (HCM)** - Provides cloud-based software and services to assist employers in managing the entire employment cycle.
2. **HR Outsourcing (HRO)** - Offers comprehensive outsourcing services, including payroll administration and employee benefits management.
   - **PEO Zero-Margin Benefits Pass-Throughs** - Manages benefits pass-throughs without adding margin.
3. **Global Solutions** - Delivers international HCM and HRO services, including both local and multi-country solutions.
4. **Client Fund Interest Revenues** - Generates revenue from interest on funds held for clients.

99e0abb3e196997325de4763f2a48ebe45f875387307f9130c75e48ad915edcd

| Name                  | Start Date | End Date | Reason for Change |
|-----------------------|------------|----------|-------------------|
| Deloitte & Touche LLP | 1968  **[0000008670-24-000024_adp-20240630.htm:66]**    | Present  | Current auditor   |

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ff765f0bf8c9d9d26423f7a040f7f153269527320ef2eb198f1ec675ca5b0930

- ADP's sales pipeline is strong and growing year-on-year across all segments, indicating healthy demand and promising future bookings.  **[ADP_3413524_16]** **[ADP_3413524_6]**
- New product offerings like ADP Lyric are resonating well in the marketplace, contributing to growth and expanding ADP's position in the enterprise segment.  **[ADP_3413524_5]**
- The company is successfully implementing price increases of about 100 basis points, higher than historical levels, positively impacting revenue without negatively affecting client retention.  **[ADP_3413524_15]** **[ADP_3413524_25]**

e6097c86580df0d41f06c946adf2bc4a1dc52075f144aba7193a5ca9727f15bd

- **Softer pays per control growth**: ADP experienced softer pays per control growth than expected, which was **broad-based** across their client base, indicating a potential slowdown in hiring by clients.  **[ADP_3413524_19]**
- **Expected softness in Q3 revenue and margins** due to FX headwinds, lower client funds interest revenue from a **100 basis point drop in short-term rates**, and higher integration expenses related to the WorkForce Software acquisition. This could impact short-term financial performance.  **[ADP_3413524_23]** **[ADP_3413524_17]** **[ADP_3413524_7]**
- **Increased competition from SMB players** investing in mid-market solutions may intensify competition for ADP, potentially impacting market share and pricing power.  **[ADP_3413524_21]**

18041f332ec5a9f99711783a4d1972360582b74d21e423c2c9c3922d1ed1105b

1. **Fiserv Partnership**  
   **Q:** How will the Fiserv partnership impact growth?  
   **A:** Maria Black explained that the partnership with Fiserv is a referral relationship where both companies will integrate products, with ADP's RUN offering embedded inside Clover and vice versa. They anticipate revenue sharing over time and see this as a significant channel for growth in the small business market.  **[ADP_3413524_4]** 

2. **Lyric Adoption**  
   **Q:** Is Lyric causing an inflection in enterprise bookings?  
   **A:** Maria Black stated that Lyric, their new name for the Next Gen HCM solution, is resonating well with clients, leading to strong additions and pipeline growth. They expect Lyric to contribute to growth in new business bookings this year, though it will take time to scale and impact financials significantly.  **[ADP_3413524_5]** 

3. **PEO Revenue Guidance**  
   **Q:** Why is PEO revenue growth slowing in the back half?  
   **A:** Don McGuire attributed the implied slower PEO revenue growth to timing-related issues, including the pull-forward of low-margin State Unemployment Insurance into Q2 due to calendar shifts, and anticipated slower pays per control growth in the PEO compared to Employer Services.  **[ADP_3413524_9]** 

4. **Demand Trends**  
   **Q:** How is demand trending across client segments post-election?  
   **A:** Maria Black reported strong, broad-based demand across all segments. Downmarket companies continue hiring and buying, though new business formations show slight pressure. The mid-market shows strength in HR outsourcing, and while they remain watchful in the upmarket due to global uncertainties, overall pipelines are strong heading into the back half. The new administration hasn't yet caused noticeable changes in demand.  **[ADP_3413524_6]** 

5. **Retention Outlook**  
   **Q:** What are expectations for retention and SMB bankruptcies?  
   **A:** Maria Black noted that retention beat modestly again, indicating small businesses are staying in business. They observed a slight degradation in the downmarket but are nearly normalized. The assumption for the back half remains that small and medium-sized business bankruptcies may pick up, but they are optimistic and see no alarming trends.  **[ADP_3413524_10]** 

6. **AI Initiatives**  
   **Q:** How are AI projects impacting efficiency and margins?  
   **A:** Maria Black highlighted that their generative AI strategy is improving service and sales efficiency. Examples include call summarization reducing call times by a minute and digital transformation in implementation leading to record onboarding levels. Sales modernization tools are enhancing productivity, and while initial investments are being made, they expect long-term positive impacts on margins.  **[ADP_3413524_12]** 

7. **Revenue and Margin Outlook**  
   **Q:** How should we view revenue growth and margins in Q3 vs. Q4?  
   **A:** Don McGuire explained that FX headwinds and lower short-term interest rates are pressuring Q3, especially with the highest average daily balances due to tax season. Integration expenses from WorkForce Software are also heavier in Q3. Growth is expected to accelerate in Q4, aligning with their full-year reiterated guidance.  **[ADP_3413524_18]** 

8. **Pricing Environment**  
   **Q:** What's the outlook for pricing yield in selling season?  
   **A:** Don McGuire indicated that the competitive environment remains consistent, with no unusual pricing pressures. They are targeting about **100 basis points** of price increases this year, higher than the historical 50 basis points but lower than the 150 basis points during periods of high inflation.  **[ADP_3413524_15]** 

9. **M&A Appetite**  
   **Q:** Has the Paychex Paycor deal changed your M&A approach?  
   **A:** Don McGuire stated that their M&A views haven't changed, and regulatory environments haven't been an obstacle. They see industry fragmentation as an opportunity and continue to seek acquisitions that complement their offerings without complicating them, focusing on tuck-in acquisitions as part of their strategy.  **[ADP_3413524_10]** 

10. **WorkForce Software Integration**  
    **Q:** How is the WorkForce Software integration progressing?  
    **A:** Maria Black reported that the integration is on track, having just reached 100 days since the acquisition. They are focusing on go-to-market strategies, aligning client bases, and pipeline opportunities. Integration efforts are underway, and they are excited about the potential impact in workforce management and the enterprise and global spaces, especially as they combine the product with their Lyric offering.  **[ADP_3413524_14]** 

11. **Bookings Visibility**  
    **Q:** How does bookings visibility compare to last year?  
    **A:** Maria Black noted that pipelines are in good shape and up year-over-year. They feel good about their position heading into the back half, although they acknowledge the need for continued execution. Visibility on full-year bookings is consistent with previous years.  **[ADP_3413524_17]** 

12. **B2B Payments Opportunity**  
    **Q:** What are your thoughts on entering B2B payments?  
    **A:** Maria Black acknowledged the potential in B2B payments and treasury management solutions as natural adjacencies. While she didn't provide specifics, she indicated that these opportunities are top of mind and that more information may be shared in future strategy discussions.  **[ADP_3413524_23]** 

7ed251b91ffcecd2a93ac104de961853837bc185871f125f6b08fff4839899ca

ADP’s Q2 2025 pipeline rose YoY, fueling optimism despite a broad-based slowdown in pays per control. Notably, the ~100bps price hike is boosting revenue without hitting client retention. Expect Q3 softness from FX and lower interest income, with Q4 growth still on track.

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d7b5a06fe9159aadd766e0fa5e716985069a63d4dd84e3857fa037ce49212af7

**Annual guidance for FY 2025:**  
- **Consolidated Revenue Growth**: 6% to 7%  **[ADP_3413524_3]**  (no change from 6% to 7%  **[ADP_3404620_3]** )  
- **Employer Services (ES) Revenue Growth**: 6% to 7%  **[ADP_3413524_3]**  (no change from 6% to 7%  **[ADP_3404620_3]** )  
- **PEO Revenue Growth**: 5% to 6%  **[ADP_3413524_3]**  (no change from 5% to 6%  **[ADP_3404620_3]** )  
- **ES New Business Bookings Growth**: 4% to 7%  **[ADP_3413524_3]**  (no prior guidance)  
- **ES Retention**: 10 to 30 basis point decline  **[ADP_3413524_3]**  (no change from 10 to 30 basis point decline  **[ADP_3404620_3]** )  
- **ES Pays Per Control Growth**: 1% to 2%  **[ADP_3413524_3]**  (no change from 1% to 2%  **[ADP_3404620_3]** )  
- **PEO Average Worksite Employee Growth**: 2% to 3%  **[ADP_3413524_3]**  (no change from 2% to 3%  **[ADP_3404620_3]** )  
- **PEO Pays Per Control Growth**: expected to grow slightly slower than ES Pays Per Control Growth  **[ADP_3413524_3]**  (no prior guidance)  
- **Client Funds Interest Revenue and Net Impact from Extended Investment Strategy**: increased by $25 million  **[ADP_3413524_3]**  (raised from reduced by $10 million  **[ADP_3404620_3]** )  
- **ES Margin Expansion**: 40 to 60 basis points  **[ADP_3413524_3]**  (no change from 40 to 60 basis points  **[ADP_3404620_3]** )  
- **PEO Margin**: down 70 to 90 basis points  **[ADP_3413524_3]**  (no change from 70 to 90 basis points  **[ADP_3404620_3]** )  
- **Adjusted EBIT Margin Expansion**: 30 to 50 basis points  **[ADP_3413524_3]**  (no change from 30 to 50 basis points  **[ADP_3404620_3]** )  
- **Adjusted EPS Growth**: 7% to 9%  **[ADP_3413524_3]**  (no change from 7% to 9%  **[ADP_3404620_3]** )  
- **Effective Tax Rate**: ~23%  **[ADP_3413524_3]**  (no change from ~23%  **[ADP_3404620_3]** )  

ff209f02eab724c2ce6731527b1e35b5bf677266b08cec91553afb7c23a29b73

f538b9ea7e3c37d308066e00768d5dd5f05500bd1d73adb215fd2ca84e013bb8

| Year  | Amount Due (in millions) | Debt Type                                   | Interest Rate (%) | % of Total Debt                     |
|-------|---------------------------|--------------------------------------------|-------------------|--------------------------------------|
| 2025  | 1,000.0 **[0000008670-25-000007_adp-20241231.htm:16]**           | Fixed-rate 3.375% notes due September 15   | 3.47 **[0000008670-25-000007_adp-20241231.htm:16]**      | 25.0% = (1,000.0 / 4,003.5) * 100 **[0000008670-25-000007_adp-20241231.htm:2]** **[0000008670-25-000007_adp-20241231.htm:16]** |
| 2028  | 1,000.0 **[0000008670-25-000007_adp-20241231.htm:16]**           | Fixed-rate 1.700% notes due May 15         | 1.85 **[0000008670-25-000007_adp-20241231.htm:16]**      | 25.0% = (1,000.0 / 4,003.5) * 100 **[0000008670-25-000007_adp-20241231.htm:2]** **[0000008670-25-000007_adp-20241231.htm:16]** |
| 2030  | 1,000.0 **[0000008670-25-000007_adp-20241231.htm:16]**           | Fixed-rate 1.250% notes due September 1    | 1.83 **[0000008670-25-000007_adp-20241231.htm:16]**      | 25.0% = (1,000.0 / 4,003.5) * 100 **[0000008670-25-000007_adp-20241231.htm:2]** **[0000008670-25-000007_adp-20241231.htm:16]** |
| 2034  | 1,000.0 **[0000008670-25-000007_adp-20241231.htm:16]**           | Fixed-rate 4.450% notes due September 9    | 4.75 **[0000008670-25-000007_adp-20241231.htm:16]**      | 25.0% = (1,000.0 / 4,003.5) * 100 **[0000008670-25-000007_adp-20241231.htm:2]** **[0000008670-25-000007_adp-20241231.htm:16]** |

d4a1537517e23c92ad81b0521c4a20dac09a0721b40eac92a8ca9e7380cb3741

- **Moderation in PEO Bookings Growth:** ADP's PEO bookings growth **moderated in the back half of fiscal 2024** compared to the previous year, suggesting potential slowing demand in this segment.  **[ADP_3395260_21]**
- **Expected Margin Pressure Due to Lower Pays per Control and Pricing Increases:** ADP anticipates margin pressure in fiscal 2025 from **lower pays per control growth**, **lower pricing increases**, and **lower client funds interest**, particularly in the second half of the year.  **[ADP_3395260_20]**
- **Risk of Normalization in Small Business Retention Rates:** ADP acknowledges the potential for **increased small business bankruptcies and out-of-business levels**, which could lead to a normalization of retention rates in the down-market segment.  **[ADP_3395260_19]**

db6f40244ef710daf770b76904229bff644089e451de652fde3b94d73cd8cae0

- **ADP expects pays per control growth to decelerate modestly next year, leading to potential revenue pressure, especially in the PEO segment**.  **[ADP_3381814_5]**
- **Investments in Gen AI are anticipated to create margin pressure in fiscal 2025, potentially slowing margin growth**.  **[ADP_3381814_11]**
- **ADP is cautious about raising prices due to inflation concerns, which may limit their ability to offset cost increases through price adjustments**.  **[ADP_3381814_13]**

ee8c8038be7a87e3c9bbe75aa6ec2c64b7c2cdd3b33fcdc1843467e36634b7c5

- **Potential Decline in Employer Services Retention Due to Client Bankruptcies:** ADP anticipates pressure on retention rates in the back half of the fiscal year due to potential increases in client bankruptcies and out-of-business events, which could negatively impact retention.  **[ADP_3371354_6]**
- **Higher Selling Expenses Impacting PEO Margins:** Increased selling expenses in the Professional Employer Organization (PEO) segment are contributing to margin headwinds, possibly indicating rising costs to compete in this space.  **[ADP_3371354_9]**
- **Longer Sales Cycles in Enterprise and Upmarket Segments:** ADP is experiencing prolonged deal cycles and increased complexity in its enterprise and upmarket segments, which may affect new business bookings and revenue growth in these higher-value markets.  **[ADP_3371354_13]**

8a6f285fd5eeec94a11e1289374fd97210d004e9fc7593f8ae30cb813cafbb3f

1. **WorkForce Software Acquisition Impact**  
   **Q:** What is the financial impact of the WorkForce Software acquisition?  
   **A:** ADP acquired WorkForce Software to enhance its workforce management solutions, expecting it to contribute about **0.5% of EBIT margin pressure** in fiscal '25 due to integration costs, amortization, and interest expenses. The acquisition accounts for **half of the 1% increase** in the revenue growth outlook, with the remainder from strong business results.  **[ADP_3404620_6]** 

2. **Employer Services Demand and Bookings**  
   **Q:** How did Employer Services perform in terms of demand and bookings?  
   **A:** Demand remains strong with a solid and broad-based sales quarter. Strength was seen in retirement services in the down market, HR outsourcing in the mid-market, and continued growth internationally. Pipelines are healthy, and ADP is sticking to its **4–7% guidance** for Employer Services bookings growth for the full year.  **[ADP_3404620_4]** **[ADP_3404620_27]** 

3. **PEO Margins and Pays per Control**  
   **Q:** What drove the PEO margins and pays per control growth?  
   **A:** PEO margins improved due to stronger-than-expected revenue, driven by strong worksite employee growth and higher wage rates. PEO pays per control is expected to grow this year but at a lower rate than Employer Services. A small **$4 million** reserve release occurred in the quarter, but no further releases are anticipated.  **[ADP_3404620_14]** **[ADP_3404620_26]** 

4. **Retention Rates and Drivers**  
   **Q:** What are the drivers behind retention performance?  
   **A:** Retention remains strong, correlating with all-time high client satisfaction scores. Investments in product and service improvements have paid off. While retention declined slightly, the Small Business Services segment held up well. ADP expects retention to be prudent in future guidance.  **[ADP_3404620_7]** **[ADP_3404620_13]** 

5. **Lyric HCM Launch and Impact**  
   **Q:** What is the outlook for the new Lyric HCM product?  
   **A:** ADP launched Lyric HCM, previously known as Next Gen HCM, a flexible and intelligent global HCM solution designed with humanity in mind. The product has generated significant interest, and pipelines have increased, but it will take time before it has a meaningful financial impact.  **[ADP_3404620_12]** **[ADP_3404620_25]** 

6. **Cross-sell Opportunities with WorkForce Software**  
   **Q:** Are there cross-sell opportunities with the WorkForce Software acquisition?  
   **A:** ADP sees significant opportunities to leverage its scale, distribution, and brand to enhance growth with WorkForce Software. The acquisition should help both companies access each other’s client bases and pursue new logos, particularly in the global enterprise space.  **[ADP_3404620_16]** **[ADP_3404620_22]** 

7. **Small Business Health Outlook**  
   **Q:** How is the health of small businesses affecting ADP?  
   **A:** The health of small businesses remains strong, with overall strength in demand. New business formations have declined year-over-year but are still elevated compared to pre-pandemic levels. ADP continues to see solid execution in the small business segment.  **[ADP_3404620_18]** 

8. **Pricing Strategy**  
   **Q:** Has there been any change in ADP's pricing strategy?  
   **A:** ADP's pricing strategy remains consistent, aiming for price increases of about **100 basis points** as inflation moderates. There were no significant changes or contributions from price beyond initial expectations.  **[ADP_3404620_21]** 

9. **Generative AI Investments**  
   **Q:** What is the progress on generative AI initiatives?  
   **A:** ADP continues to invest modestly in generative AI, seeing good results in call summarization tools, sales support, and technology development. No significant incremental investments are planned at this time.  **[ADP_3404620_17]** 

10. **Capital Allocation and M&A Strategy**  
    **Q:** Is ADP becoming more acquisitive with larger deals?  
    **A:** ADP's M&A strategy remains unchanged, focusing on acquisitions that complement its offerings without complicating them. The WorkForce Software acquisition aligns with this approach, and future M&A activity will follow the same disciplined philosophy.  **[ADP_3404620_11]** 

0a8c39f9ad53356420fa915795c0df5defcaa3518d818cc02dbb1ebb9ed03bd1

1. **Bookings Performance and Demand Outlook**  
   **Q:** Can you provide more color on bookings performance and demand?  
   **A:** Bookings showed **broad-based strength across small business, mid-market, enterprise, and international**, leading to an **exceptional 7% growth for the year**.  **[ADP_3395260_7]**  The HCM demand environment remains **strong**, as our services are an **imperative** for businesses, and pipelines look **strong year-over-year**.  **[ADP_3395260_7]** 

2. **Pays per Control Outlook in ES and PEO**  
   **Q:** How is pays per control expected to perform in ES versus PEO?  
   **A:** We anticipate **pays per control** to **moderate to 1%-2% growth** in '25.  **[ADP_3395260_8]**  **ES is expected to be somewhat stronger than PEO**, with pays per control growth in PEO likely **lower than in ES**, but we're still optimistic about overall growth.  **[ADP_3395260_8]** 

3. **PEO Revenue Guidance and Drivers**  
   **Q:** What's driving PEO revenue growth despite lower WSE assumptions?  
   **A:** The main contributor to PEO revenue growth is **zero-margin pass-throughs**.  **[ADP_3395260_14]**  While **pays per control are under pressure**, we're focusing on **investing in sales** to drive top-line growth and expand our worksite employees, despite some **margin pressure from workers' compensation**.  **[ADP_3395260_14]** 

4. **Pricing Strategy and Impact on Retention**  
   **Q:** How are you balancing pricing increases with client retention?  
   **A:** We're planning a **100 basis point pricing increase** in '25, down from 150 basis points in prior years, reflecting the **moderating inflation environment**.  **[ADP_3395260_12]**  We're **careful not to over-rotate on price**, prioritizing **long-term client relationships and lifetime value**, and we're confident this won't adversely affect retention.  **[ADP_3395260_12]** 

5. **Generative AI Monetization and Impact**  
   **Q:** How will generative AI contribute to revenue and growth?  
   **A:** Generative AI will both **enhance sales, retention, product efficiency, and NPS** and offer **monetization opportunities**.  **[ADP_3395260_13]**  By integrating **ADP Assist** across our products, we're aiming to **drive more sales**, improve client satisfaction, and **increase efficiency**. Each initiative includes goals for **revenue growth**, though it's too early to share specifics.  **[ADP_3395260_13]** 

6. **Competitive Landscape and Pricing Pressure**  
   **Q:** Are you seeing increased price competition in the market?  
   **A:** We haven't observed any **meaningful price compression** and consider the environment **status quo**.  **[ADP_3395260_10]**  While competitors run promotions, nothing seems atypical. The key change is that **we're stronger than ever**, with the **best product, record retention, record NPS**, and **exceptional sales execution**.  **[ADP_3395260_10]** 

7. **Bookings Composition and International Growth**  
   **Q:** Can you elaborate on bookings across segments and international business?  
   **A:** In the **down market**, we onboarded **50,000 new small business clients in Q4 alone**, with **890,000 of our 1.1 million clients** now in this segment.  **[ADP_3395260_11]**  **Mid-market sales were phenomenal**, and our **next-gen HCM offering** in the enterprise space is seeing **record results even before general availability**.  **[ADP_3395260_11]**  Internationally, we've had a **fantastic year**, with each quarter outperforming the last.  **[ADP_3395260_11]** 

8. **Business Resilience in Economic Slowdowns**  
   **Q:** How does ADP perform during economic slowdowns?  
   **A:** Our business is **durable** because HCM services are an **imperative** for companies.  **[ADP_3395260_15]**  We have a **playbook** to quickly adjust to shifts in demand. While a significant macro downturn might impact **bookings**, we're confident in our ability to **adapt and flex**, leveraging our experience and operational levers as needed.  **[ADP_3395260_15]** 

34884217c8a1471f76724c96e0df6f4a550b12fb2968ab06556de3b87e588b5f

- **ADP is gaining market share in the mid-market segment due to investments in best-in-class products, distribution, and digital transformation, leading to high client satisfaction, record-high Net Promoter Scores, and strong client retention.**  **[ADP_3381814_20]** **[ADP_3381814_10]**
- **ADP's PEO business remains strong with a robust value proposition, with 50% of PEO clients coming from existing clients, indicating strong demand and cross-sell opportunities.**  **[ADP_3381814_21]**
- **ADP sees significant growth opportunities both domestically and internationally, with ongoing expansion into markets like India and Southeast Asia, where they pay over 1 million people every payday; saturation is not a concern.**  **[ADP_3381814_11]**

1777cf0ea4c154c9eadcff631121ff8f1cd0ae715dd2b70ca8238b3c398b51ac

1. **PEO Business Outlook**  
   **Q:** PEO acceleration, but revenue outlook hasn't changed; timing issue or sector concentration?  
   **A:** Bookings for the Professional Employer Organization (PEO) are very good, with pays per control stabilizing.  **[ADP_3371354_7]**  These improvements are expected to lead to the reacceleration we've been pointing to over the last couple of quarters.  **[ADP_3371354_7]** **[ADP_3371354_26]** 

2. **AI Investment and Returns**  
   **Q:** How are you anticipating return on AI investments and timeframe?  
   **A:** We're investing in Artificial Intelligence (AI) across product innovation, efficiency, and go-to-market strategies.  **[ADP_3371354_8]**  While current investments are modest, we expect to see returns down the road as these tools enhance client experience, associate efficiency, and sales effectiveness.  **[ADP_3371354_8]** 

3. **ES Margins and Interest Rates**  
   **Q:** Is lower ES margin guidance due to rate surprises?  
   **A:** Float income is a factor in guiding margins; we use market yield curves to estimate returns.  **[ADP_3371354_12]**  No surprises beyond overall market changes, and we remain cautious given interest rate movements.  **[ADP_3371354_12]** 

4. **Sales Trends and Competitive Landscape**  
   **Q:** How are 3Q sales trends and competitive pricing?  
   **A:** Demand remains strong; companies are still hiring and investing in HR.  **[ADP_3371354_13]**  The down market performed well with **~30,000 units** onboarded in January alone.  **[ADP_3371354_13]**  The competitive landscape is unchanged, and we have solid pipelines across all market segments.  **[ADP_3371354_13]** 

5. **Average Balances and Interest Rate Impact**  
   **Q:** Impact of payroll tax deferral on balance decline and outlook?  
   **A:** The payroll tax deferral caused a prior decline, but that's now behind us.  **[ADP_3371354_11]**  We expect **2–3%** balance growth for the rest of the year, though lower interest rates present a **$20 million** headwind.  **[ADP_3371354_11]** 

6. **Pricing Environment**  
   **Q:** Any changes in price pressure or competitor discounts?  
   **A:** We're not seeing changes in the price environment and remain appropriately priced.  **[ADP_3371354_18]**  We continue to offer premium services with better value, and last year's price increases were well received.  **[ADP_3371354_18]** 

7. **PEO Selling Expenses**  
   **Q:** Are higher PEO seller expenses due to increased competition?  
   **A:** There's nothing unusual about our selling expenses; higher sales naturally lead to higher selling expenses.  **[ADP_3371354_9]**  We're not seeing any fundamental changes in the competitive landscape driving these costs.  **[ADP_3371354_9]** 

8. **International Growth Opportunities**  
   **Q:** Comment on international value proposition and need for partnerships.  
   **A:** International revenue isn't where we'd like it to be, even though we pay 40% of people internationally.  **[ADP_3371354_10]**  The value proposition differs outside the U.S., but partnerships like **Canvera** help us manage global treasury functions effectively.  **[ADP_3371354_10]** 

9. **Monetization of AI Products**  
   **Q:** Is ADP Assist monetized or enhancing customer satisfaction?  
   **A:** ADP Assist aims to make things easier for clients as part of our digital transformation, without additional charges.  **[ADP_3371354_16]**  While not a monetization effort now, we believe AI investments will yield significant returns through new products and increased sales in the future.  **[ADP_3371354_16]** 

10. **Pays per Control Guidance**  
    **Q:** Drivers of second half deceleration in pays per control growth?  
    **A:** We maintain a **1–2%** growth guidance for the year, building in some conservatism.  **[ADP_3371354_22]**  Employment demand remains robust but is softening slightly.  **[ADP_3371354_22]** 

11. **Expansion into Payments and EWA**  
    **Q:** Opportunities to increase capabilities in payments like EWA?  
    **A:** We see tremendous opportunity with offerings like **Wisely** and Earned Wage Access (EWA).  **[ADP_3371354_25]**  With **41 million** wage earners paid in the U.S. and **10 million** active app users, we're exploring partnerships to add value in clients' and employees' daily workflows.  **[ADP_3371354_25]** 

12. **PEO Trends in Key Verticals**  
    **Q:** Changes in trends within big PEO verticals?  
    **A:** Trends in professional services have stabilized and are no longer contributing to deceleration.  **[ADP_3371354_17]** 

13. **PEO Bookings and Demand**  
    **Q:** Is ADP doing anything differently in PEO or is demand changing?  
    **A:** Demand remains incredibly strong; we're focused on executing PEO bookings.  **[ADP_3371354_21]**  This marks the fourth quarter of positive bookings momentum for the PEO.  **[ADP_3371354_21]** 

14. **EBIT Margin Outperformance**  
    **Q:** What drove EBIT margin outperformance; is GenAI spend incremental?  
    **A:** Modest revenue outperformance contributed to margins.  **[ADP_3371354_15]**  We have a bit of incremental GenAI spend, slightly higher than previously planned, but not a significant amount.  **[ADP_3371354_15]** 

15. **Retention Trends and Outlook**  
    **Q:** Anticipating lower ES retention decline due to fewer bankruptcies or better service?  
    **A:** Retention is better than expected.  **[ADP_3371354_6]**  While we haven't seen increased bankruptcies yet, we're planning for some pressure in the back half as a precaution.  **[ADP_3371354_6]** 

16. **Float Income Guidance**  
    **Q:** Explain increase in client short portfolio outlook.  
    **A:** We've tweaked our borrowing strategy by spreading borrowing over several days, increasing average short balances.  **[ADP_3371354_14]**  This is not a change in investment strategy but improves market access.  **[ADP_3371354_14]** 

17. **ERTC Impact on Demand**  
    **Q:** Changes in client demand or competition post-ERTC?  
    **A:** The accelerated Employee Retention Tax Credit (ERTC) deadline increased processing volume.  **[ADP_3371354_24]**  Financial impact to us is minimal; we're focused on supporting clients through this transition.  **[ADP_3371354_24]** 

18. **Implementation Revenue**  
    **Q:** What percentage of revenue is from internal implementations?  
    **A:** Less than **10%** of our overall revenue comes from setup fees; it's not a substantial amount.  **[ADP_3371354_19]** 

19. **Pricing Strategy and Increases**  
    **Q:** Thoughts on this year's price increases?  
    **A:** We'll consider price adjustments in the upcoming budget cycle, weighing factors like inflation.  **[ADP_3371354_18]**  Last year's increases were well received, and we aim to balance competitiveness with long-term client value.  **[ADP_3371354_18]** 

20. **Offsetting Interest Rate Headwinds**  
    **Q:** Initiatives to offset revenue headwinds from declining rates?  
    **A:** Declining interest rates may boost economic activity, leading to higher revenues and bookings.  **[ADP_3371354_23]**  Our strategy includes reinvesting further out on the yield curve at higher rates to offset short-term rate declines.  **[ADP_3371354_23]** 

21. **PEO Growth Expectations**  
    **Q:** Expect continued improvement in WSE growth; factors for revenue per WSE?  
    **A:** Yes, we expect bookings, stability in pays per control, and favorable retention to drive reacceleration in the back half.  **[ADP_3371354_26]**  We're monitoring factors like payroll per worksite employee and state unemployment rates.  **[ADP_3371354_26]** 

22. **Retirement Trust Services**  
    **Q:** Discuss investment in setting up your own trust.  
    **A:** We've launched in-house trust services due to a shrinking pool of capable third-party trustees.  **[ADP_3371354_5]**  This offers better control over costs, leading to better pricing and service for our clients, and keeps data within ADP's ecosystem.  **[ADP_3371354_5]** 

9a07de506b7734e988bf7717afdf85af444ded222569f65ae664f4aea1717eb6

- ADP reported **Employer Services (ES) new business bookings growth of 7%**, reaching the high end of the **4% to 7% guidance range**, with strength across **small business, mid-market, enterprise, and international segments**, indicating robust demand and effective execution.  **[ADP_3395260_2]** ,  **[ADP_3395260_11]**
- The **next-gen HCM solution is exceeding expectations**, with strong sales even before general availability, showing significant market interest and potential for future growth in the enterprise segment.  **[ADP_3395260_2]** ,  **[ADP_3395260_11]**
- Achieved **record-high client satisfaction scores** and **better-than-expected ES retention at 92%**, which supports future retention and growth.  **[ADP_3395260_2]**

fed25820a7dabb0270b6e1ea0ad87d642dd2453eff00349577e8dfcc289d46b9

1. **Margin Outlook for FY25**  
   **Q:** Will Gen AI investments pressure margins next year?  
   **A:** Management expects margins to improve in FY25, but possibly at a slower rate due to increased expenses from Gen AI investments. They are not signaling a decline in margins and anticipate some tailwinds from interest rates.  **[ADP_3381814_12]** **[ADP_3381814_22]** 

2. **Revenue Guidance Update**  
   **Q:** Is revenue growth coming in at higher end of range?  
   **A:** Yes. Strong client retention and favorable client funds interest are contributing to revenue growth, making management confident they will reach the higher end of the **7%–8%** range.  **[ADP_3381814_8]** 

3. **Pricing Strategy**  
   **Q:** Any updates on pricing plans amid inflation?  
   **A:** ADP remains thoughtful and measured in pricing to maintain the right price-value equation. This year’s price increase of about **1.5%** was well received. They will continue to be cautious with pricing and monitor the competitive landscape as they plan for FY25.  **[ADP_3381814_15]** **[ADP_3381814_20]** 

4. **Client Retention Trends**  
   **Q:** What is driving strong client retention?  
   **A:** Record retention is led by the mid-market segment, driven by investments in product and achieving record client satisfaction. Fiscal '23 was a record year, and management is very pleased with current retention levels.  **[ADP_3381814_7]** **[ADP_3381814_10]** 

5. **PEO Business Outlook**  
   **Q:** Has anything changed in PEO demand or growth outlook?  
   **A:** Management remains very bullish on the PEO value proposition, which is stronger than ever. Despite recent growth slowdowns, fundamentals are strong, and **50%** of PEO clients come from their existing base.  **[ADP_3381814_22]** 

6. **International Expansion**  
   **Q:** Is international expansion a growth catalyst?  
   **A:** Yes. ADP sees significant growth opportunities internationally, especially in Asia Pacific and the Nordics. Deployment of Next Gen Payroll in international markets is expected to further boost bookings growth.  **[ADP_3381814_11]** **[ADP_3381814_18]** 

7. **Market Saturation Concerns**  
   **Q:** Are you concerned about market saturation?  
   **A:** No. ADP believes there is still tremendous growth potential in the HCM space. Only about **50%** of new bookings come from new clients, indicating significant upsell opportunities within their base.  **[ADP_3381814_11]** 

8. **Mid-market Success**  
   **Q:** What's driving strength in mid-market?  
   **A:** The mid-market segment is seeing strong growth due to investments in product, excellent distribution execution, and high client satisfaction. ADP is getting stronger and competing effectively in this highly competitive space.  **[ADP_3381814_10]** **[ADP_3381814_19]** **[ADP_3381814_21]** 

9. **PEO Pay per Control Trends**  
   **Q:** How are PEO verticals like tech and professional services doing?  
   **A:** PEO bookings softened slightly in Q3, but pay per control growth stabilized after prior deceleration, particularly in tech and professional services. Worksite employee growth accelerated **1%** over Q2, reflecting booking success despite modest PPC pressure.  **[ADP_3381814_13]** 

2fc2d2d39aa87a9a8700c583059a13f6291b9d280f841b869003a2f4fa537b85

- ADP is experiencing strong sales and bookings momentum, particularly in the down market, with **tremendous second quarter results** and **solid pipelines**, indicating robust demand and effective execution.  **[ADP_3371354_13]**
- The PEO segment is showing positive momentum with the **fourth consecutive quarter of strong bookings**, suggesting a potential reacceleration and highlighting the strength of ADP's value proposition.  **[ADP_3371354_21]**
- **Retention rates are performing better than expected**, with retention running at record levels, reflecting strong client satisfaction and loyalty, which may lead to higher revenue stability.  **[ADP_3371354_6]**

f5d43ebb8f9bce0ab8ed7c1aa24ccf82119a97bb4ca2b78d7f4f809e1d076f18

Automatic Data Processing Inc (ADP)

Financials