Automatic Data Processing (ADP) 27 Jul 222022 Q4 Earnings call transcript

Good morning. My name is Michelle and I’ll be your conference Operator. At this time, I would like to welcome everyone to ADP’s fourth quarter fiscal 2022 earnings call. I would like to inform you that this conference is being recorded. After the speakers’ presentation, we will conduct a question and answer session. the to turn now will conference Mr. over I Relations. Hussain, Vice Investor President, Danyal Please go ahead.

and for our for earnings to Welcome you President, our Rodriguez, apologies Thank Michelle, results Black, Maria everyone this Participating are ADP’s our morning, quarter our released CEO, webcast. Don everyone fourth the Earlier fiscal the and XXXX McGuire, quarter. call and today Carlos CFO. to delay. brief we

where Relations you available are the website website on investor at Investor that investors.adp.com, also Our today’s earnings materials presentation will and SEC the find call. our accompanies

our statements non-GAAP also information Today’s measures current actual of involve encourage to description differ our risk. expectations. We we to to GAAP contain will over comparable events measures release. the of materially During turn be investors call, to let results future With for we useful A it call of will items. review these reference with the in most and forward-looking could Carlos. items me impact financial be our can refer from cause the earnings some factors certain which measures non-GAAP along and with filings that found SEC to that exclude that you reconciliation believe to to that, our on additional a

constant a organic you fourth XX% quarter everyone thank We XX% revenue for with growth you fiscal Dany, and XXXX strong and finished that Thank joining growth. our our call. revenue featured currency

growth, record of in XX% ended growth, up the importantly position adjusted record We year we full growth, XX% we the also strong reflecting near EPS expansion level revenue and fiscal and EBIT margin which helped delivered basis our EPS adjusted XX drive margin market. XX% adjusted bookings HCM XXX and points points retention, of XXXX achieved expansion, basis with for

our $X.X ever. in pleased were opportunities we first had cover pandemic, services in bookings exceed turning compelling QX about site bookings their strong has of talk for a for what in over bookings, business me my inflation the offerings with new In several the to to years of global accelerating time sales billion we Maria ES perspectives. effect in bookings new force from employer we’ve $X Starting the before more new quarter ongoing when about we billion year prior well with market. bookings. continued with of conflict the are this it growth highlights ADP. and $X XXXX the clearly XX the and our fiscal with over and business some but PEO, from resulting recession, the marking resonate over billion Let ES to HCM Don concerns total, fantastic seen Despite best including the have sources year. we performance incredibly including throughout by growth in XX our sold the Maria that I’ve is With the will largest in ahead, global finish, growth business the and uncertainty, pleased Ukraine, quarter very delivered quarter,

business like but of play less start by Moving ES levels. macroeconomic the in some record our versus We quarter. out, was of our of quality, retention on, rates level expectation towards macroeconomic mix, fourth service called flat XX.X% Client as exceeded expectations once full product retention out-of-business in retention factors, to that is nearly year drive again and factors, fiscal we our did last XX.X% driven SMB of including anticipated. clearly some factors than XXXX and and for pre-pandemic year’s see several normalization at the

levels our of platforms. service of businesses, retention will fiscal for a we to our on clients for client including have you and hear amount assumption high modern for although retention forward and levels. performance normalization and particularly and again the several strong a and and that product scaled from satisfaction rates our year these so have to once macroeconomic-related for XXXX, fiscal Don retention deliver making our are at our we levels again our set excited record are in midmarket, so new XXXX achieved look experience delivered continued modest importantly, in More teams best-in-class to a maintaining historically once such in an we record We

our as Moving control healthy. continued growth quarter among per X% onto growth was resilience growth metric our environment term per control the that our strong for has strong we our for demand conditions and X% coming although for in testament exceed year, has pays to a data persistently the today our to of will suggesting remains pays and remain expect employment with the near employment This a labor clients served the demand slow client labor picture, reflecting quarters, that for naturally clients, expectations.

the great we quarter it up and strong this quarter. mark employee to year. growth worksite delivered worksite the thrilled had QX in XXX,XXX business another XX% crossed PEO as were and our Finally, for year, We XX% wrapped employee average a of have

to continues putting years for we a more is same any to time, at service as team now. experience hard As and had once combination TotalSource on as of and do for $X entered later efficiencies, about strong the still for over level XXX,XXX great anticipated clients in volume them I unique in sure clients worldwide We end, us work great this drove XXXX thank back, back you and industry At XX decades would that, then, know, billion at I prudent ADP a conditions. number we’ve now growth bookings to a serve surpass plenty experienced businesses. but near to the a business efforts year ago acquisition, record not joined for tight exceed deliver together given we’ve be step for retention new fiscal years ADP was two there Maria. platform, benefit to scale, I associates, in to day and a even the opportunity able plain PEO course, through headcount demand manage ways. and way growth, great turn I with track and PEO which our through clients us by clients their ADP with I’ll again. of through through and for our PEO market over bullish been here of labor also have coming The it is of pace Taking to and growing our the an the could when ahead I’m but was this us million

data which a better million To initiatives With consistent we to experience-oriented behind of user our provide have contextual achieve insights stand opportunity to and from fiscal their experience, to this, our have clients. our was on take you intuitive, applied applications; research-driven transaction-oriented and review client across with platform, one applications where action-oriented faster, words, be about heading us, experience nearly designed more in initiative Thank is Carlos. more the ’XX new is fiscal product X more working interaction we we our and are to other gained with to looking, some solution. I key where unified ’XX the on an update and we informed and throughout in fiscal want by and ’XX. core we talked this in approach us At move had our

experience, moved ’XX, to Our best we our as next-gen focus including our them, experience. has from to been fiscal RUN, user the HCM, listen to design clients. utilize on over In of XX,XXX Now learn over thousands IHCM well and hundreds as to clients, clients their Workforce new clients input this and of

clients UX. so and mobile for far in plan particular exciting has additional platforms. We a been beyond the modules and to rollout reasons for as well to experiences ’XX, experience. our as further to us new to also Workforce expand moved fiscal Now been positive Feedback over Workforce few within the remaining this in has user key we ADP app extremely Now

is the growing traction in market. U.S. enterprise First its

tier Now the employees builds with on for it more an to our is customer’s reflection continued momentum and end years. of Just Study. perspectives already of the time presence selling momentum differentiated. from U.S. the first HRO Voice the highly Canada, or is the Customer Workforce places choice on highest lower U.S. in the overall the and where based users this traction provider was of This This all few a past Workforce possible was up the Gardner’s in midmarket quarter, ADP and space X,XXX these had annual in end strong rated in market and was in has Now

portion growing next-gen Workforce Second is new payroll the a roll-out engine continued Now our of our clients. of to

Now, platforms, to better experience having a from also engine next-gen better public offer to not architecture product a our offer native Our benefits Workforce but us enables empowers cloud only payroll global and like service. and

incredibly engine We up are for over to excited our clients and quarters. to Now complex more continue coming Workforce larger to the payroll scale

suite, important better and connect focus on employers the continue of HCM Finally, to we with talent employees. ability an engagement help their to increasingly our aspect with

which employee launch will seamlessly and we tool calling offer employee employee a Institute Research leverages we’re to listening capture Voice survey from of quarter, across Employee, a the sentiment to cycle. instruments This ADP new the clients the survey robust life a offering way that

to out team to this it global in a client the about of solution love to to born engagement that employee product our return identify and an need have of and I things market. opportunity work ability workplace the reflects the solutions a of it One solution able been is meet quickly drive, develop our elevated was

allowing to Google made self instantly Apple for we we full their Wisely some the Wisely start now on, this thereby account exciting support wait and card. Most a without from wallet physical using Moving and with to Wisely for digital Pay, capabilities offer their and quarter. having without to enhancements employer receive notably, enrollment employees program

employees offering free portion offering our a We is employees of Wisely. who their access for The our through wage also payday, key seamless earned solution solution most use deeper importantly earned app one by with to partners. a a for wages and receive members of one enables to integration Wisely prior expanded

over U.S. years. over With today larger prospects these and incredibly to to on an growth members our for enhancements active even from coming forward look about more it the horizon, million of X.X the excited base taking payroll portion and we’re Wisely the

financial from investment strong our platform with XXX,XXX over employees retirement we the about strength significant our with and leveraging independent our in expand offer as fiscal of XXX-K, plan to SEP services, and scale our including the also of options within unbiased proud are advisors business record to our market key clients forward suite. market today HCM During the opportunity retirement our are look year With strong of their and excited retirement for solutions, an investment integrated and over and we even incredibly app. but highlighted component managers base clients, give services, business, clients. ADP a advisory payroll our and looking we provide beyond to we mobile SIMPLE seamlessly plans, key another ’XX, XX,XXX access We share more year. was keeping of Fiscal services the over XXX services ’XX our

is closer HCM next-gen on capacity building continue last year’s solution we shared pipeline our our Finally, we the a to sold day. for as investor getting clients, implementation as of broader at rollout

product business buyer growth year. that sales to organization to and While continued growth sales are it all new momentum excited these products drive marketing are marketing bookings, about this and we we only enhancements we drive have and it and about investments into to end, and too, a the translate our others match of and can our when planned excited

opportunities. mentioned, all we win improvements higher drive sales our product expect intended continue breadth offerings the I expanded higher to First, of rates, force on as are realization, these capitalizing and well or to many others, just price an fully as

digital Second, and both and marketing broad and brands our our we are making into continued traditional investment network. into growing partnership in

average year quota ’XX. with sales have additional headcount fiscal Third, range carriers, digit to we excited over we in stepping grow are year to single the hundreds of into to mid be and able at new sales in are end our expect invested the headcount and

on to designed sales drive to our sustainable our execution growth we ES is Continued expect product and bookings marketing of growth, and and X% strategy for forward our Growth look to a to our progress. drive ultimately ’XX to bracketing X% X% for investor and on priority around day. we from update target of term is us, continuing you X% to medium fiscal

Now over to Don.

Maria, morning you and Thank good everyone.

headwinds expectations Our to from expected basis a XX% strong despite the basis, with growth year QX an than FX higher close a of organic represented our growth and revenue a ahead reported constant strengthening XX% currency on on dollar.

and growth basis with overcame Our from margin the headcount the mentioned, revenue expectations drove XX% cash return selling growth ongoing revenue throughs, Maria was and strong quarter, about leverage PEO to like EPS performance of robust line via by just investors supported as and our EBIT adjusted points, pass up margin expenses, higher growth adjusted our XXX our in share our sales investments growth for repurchases.

full the sources of at landed expansion, incremental up revenue of XX and of course different We margin expense about For year, basis few growth. XX%. a points XX% to over adjusted EPS grew delivered $X.XX, offsetting the year, the

quarter than increase of For of reported growing as lower expected currency previously basis employer key faster headcount basis like on on previously continued X% pays increased result basis. of anticipated. our was retention a bit a control, than The growth the per and planned stronger an margin than and outperformance ES a a segment, XXX organic services revenues on in points our metrics was function and revenue X% constant

grew our a the basis increased full For year, points. ES basis our on ES reported XXX and X% revenues margin

grew on pays year-over-year a large all For from bookings, was basis our continued quarter as to the PEO, QX. in points quarter retention, workers’ due part basis XX%, in compensation same revenue well. reserve to slightly increased to and Average employees margin perform accelerating adjustments. favorable XXX store up worksite PEO XX% XXX,XXX in the

turn our ranges, outlook points. employees XX%, to some average the margin the For now for grew beginning both remarks. XX high PEO our our year, full and fiscal with basis revenues of worksite our I’ll expanded XXXX, end guidance overall and at

one concern we there already about creating upward base, recognize global that the expense that are potential an on on pressure recession, at is perhaps the a have inflationary one. We hand time environment is or our upcoming in and we clearly same

interest signs entering near from positioned holds, benefit rebound momentum there strength, our in ’XX term continued a hand, of if forecast higher other rates strong the obvious the we is market’s are are and and On fiscal no of income. interest to

beginning now last and headcount strategy, labor focus Our perhaps a year end, our continue didn’t to on to to be and investments investor making ES we chance will be executing tight been also growth deliver by Onto driven of key expect assumptions. annual shared the the at day. medium and in in objectives revenues, market, have where to X% to to or November segment above get term that that’s our for expect growth will we the numbers, continue following ’XX at we a with we X%

be Maria expect bookings our to we X%, to First, ES business which covered. growth new X%

at our in ES For business year’s record normalization to ’XX units. levels and last the further anticipate we we some even it’s below retention, while we of record of believe maintain prudent fiscal level, finished touch levels some other year XX.X%, business retention a in

for of ES Our initial retention decline XX in year. basis is assumption for points a XX the to

typical range. points We X% our points For basis talk a more basis to pays we around about with rate, benefit price XX a be that anticipate levels, growth expect X% to pre-pandemic to normally back to to year. control, this return contributing XXX XXX near as per ES we but employment growth

For expect income repurchase client our should to interest rates balance and interest funds drive overnight on growth maturing higher nicely. interest combine rates revenue, higher with we up continued securities

as fiscal to two fiscal expect in ’XX. Between Market securities an the rate Fed fiscal ’XX from securities, Committee those increase and to maturing this rate extended portfolio, our X.X% funds overnight about the and short funds course over of invested drivers, we expected long portfolios we increases in which Open average benefit in assuming will will client benefit at Federal yield of Our reinvest is the year, X.X%. X.X%

a yield a ’XX, ’XX bit grow balances and impacts million $XXX a EBIT. X%, XX% our million fund we short otherwise a increase is invest $XXX our million the of experienced fiscal control, expect top the number in borrowing wages, interest range in the fund from million $XXX our would. client reminder, robust range our together, funds that net strategy here Meanwhile, increase expected million our due out funds us growth expect which as ’XX. Feds enables in curve impact of of from term client ’XX we million borrowing $XXX to This to by fiscal those less, the to fiscal on in by clients, costs in ladder is this increase on and to slightly will revenue X% this pays The We to fiscal per further to is client adjusted track to supported growth $XXX rate. than portfolio to to lower and from the year. Putting last and in we very a $XXX growth

of reinvest positive. factor from Clearly strategy a with we maturing and our of fiscal headwind this the ES weaker with and As pound amount should the gradually net is Back revenue for fair revenue about consider the more over parity our impact revenue between the a to XX% segment funds and outside in dollar our FX client factoring client reverse with X%. we’re generated securities, fund headwinds. FX of one outlook, gap being become ’XX again to U.S., ES the well year-over-year

we’re outlook. to strong revenue, ’XX this we to funds strong ’XX, ES but outlook, and client from margins pleased able margin increasing margin, some to to part our XXX growth on inflationary to growth, including our in XXX increase it planning because typical growth an coming of part more in in we’re our fiscal expense some are year, a than of our This wages in guide pressure For to points. for revenue benefiting fiscal due did in will interest basis expect ES overall which be does late due we year, which be headcount of and base

onto segment, PEO less zero contemplating of is bit XX% year, outlook This of to from growth excluding investor Moving pass The our grow fiscal per digit deceleration for revenues in driver course are day last we ’XX. target single through X% That compares our for in revenue PEO much contribution outlined would compared to a high XX% to margin revenues a employee X% PEO and we represent fiscal the that growth to XX%. ’XX growth the we worksite store PEO expect but of to to at primary XX%. pays the same from November. control average

margin XX basis ’XX XX to expect We X% and points down ’XX XXX margin margin our to PEO fiscal fiscal points. EBIT growth XXX fiscal adjusted our outlook result in to in in of strong all be revenue expansion Adding up to X% up, consolidated compared is to is for a basis our outlook it ’XX. for

and effective buybacks. be expect ’XX year-over-year expect we XX%, slightly XX% one to and of rate our Q&A. to we benefit growth for to margins by We will client rest I’ll XX% but year. tax interest for fiscal down the growth because be adjusted headcount the more turn points expect back in on - early as adjusted from cadence comment XX expect year significant steadily funds to to increase supported make EPS about now we to EBIT Michelle of basis build then the the about build I’ll the because year it progresses, over in QX

Bryan instructions] with Our comes Cowen. [Operator question Bergin first from

open. is line Your

us weeks it I about seen sense you’ve you Can market. like demand optimism you’ve talk then It demand you market, through the here as you. heard environment? couple change international, talk about mid down size client Hi, cadence. you question. continued Have a pace relates a accelerated more a to in the Thank across up just any start booking Can what in to as I wanted sounds and July? of the it gone in with bit good morning. through first give just market, XQ. seen

the for solid the full Yes, quarter, business but saw I’m strength of that very, as overall one results, broad-based. to as - really and the performance the was each our we to for happy both very fiscal markets. absolutely on well comment With year year in full Bryan. the bookings fourth remarkable pieces. proud across of was respect new both There strength

in We retirement the would prepared I I callouts I few HRO market even I know strength does think a the didn’t I’d a in beyond that mid was you be our continue to the PEO. if remarks, I The highlighted give, The market. again. saw mentioned perform. services but mention strength us. remiss HRO mid for offerings it

confident was lockdowns impacted We also in results highlight strength continue longer was with quarter but fantastic that of to to market felt of perspective, the and tremendous so our not RUN. in our our after the with I and the quarter the seeing RUN year, a which Then business in see bit more we’re on a results, international the had least, work saw front, organization. definitely sales pleased Canada, so offer, pandemic from as last the the very international very then down Canada a proud very

environment feel for the and in June as thank quarter, demand quarter, the saw here necessarily out the quarter, so As a you environment as it in was is we the the I us world, there I into closed a what and can mentioned. sitting we asked month was record the accelerated how the on was of throughout things think July. accelerate some while right quarter, but how the can’t weeks did comment the macroeconomic you the the was we happening June the our acceleration on we specifically in quarter demand about results see about as throughout feel year, in we suppose and quarter few good - the so progress now, ever, We we I significant did as month and about actually for strength throughout saw do questions. fact, demand comment

discretion and things have talk about they where should slow to things insulate where the can you a healthy It down? EBIT you’re like amount sounds talk about you on making might have you the then some to of a down, throttle across follow-up Can you organization additions. and resource just margins. just investment, those taken If then margins? slow have levers Okay, do

it’s Yes, question, very question. a for so thank good you the

as service quarter, just quickly to particularly need can, resources also just the fully I we in you materials were as they model us focused that to sales and remarks get step off as and the able us those get little into generating make clients makes that those than in make have, I the is late can a We the during sure fully sales about and all additional that, good we something to team, a staffed to distributed, at as with where quarter, had say to as staffed quarters, which good upon business really on mentioned are organization difficult late ’XX following that, will fourth we we our implementation the we fully we those time have sure feel we the the so little on think feel process, things. more bit so that that, to that going the staffed be was we to more bookings we in need following ’XX, the would fourth December-January-February. staffing prior into if with I do a mentioned then all record year-end opportunity do that particularly look in really of we about revenue bit think sales comes course side. through we I can

in think in course, temper still we’re that’s are seeing and that’s navigate We potentially certainly the it’s can as coming, levers changes a elsewhere, recession arise. we of something media On the still that that adeptly costs environment, able we historically about pretty and one, in I etc. lots should think and referenced have of have of everywhere that shown so the waters are and of macro temper and do other think talk I flexibility is a the of if necessary, headcount hand, addition those situation kind we’ve we I generally result should our more as as we we to

you. thank Okay,

with Credit comes Suisse. from question McVeigh next Our Kevin

open. is line Your

like the much, structural, thanks little be know a if Great, so just step-up don’t given results. this it the clearly but congratulations the or on function outcome in trends payroll recent and more that seeing engine is are for where I you whomever, a feels Is Carlos retention been will COVID. because it’s success, the of next-gen a ’XX super, or ’XX. super that just post clearly into

normalize at of or our feels it’s focus not, a like but part or level. not to structurally think higher whether it is starts I that

retention multiple There in in because probably down that’s talk once recession for of a we that structural some slight mix can of to represents terms stronger, in some expected. mid this business we it’s point we was think much again do thing out XX ’XX, just made as I retention to as broken more kind is--I not because where next-gen market, want total a really the so market make next that’s probably macroeconomic the clients not--I are it see impact just and know went our I of because we retention couple factors some through improvements. to mentioned, big that will remarks, and would else more mainly years painful structural so recently really payroll mix, of obviously, as forth it, of in going but a market that record, in normal just on in sales level, really which you’re appear come But and we represents--the is is is not correct that this improvements. that, of to of majority than and are a as see one we the why, share really that saw we that, was time see, ago, expected so the and and if one the they will onto some the some reasonable, on that be readjustment causing platforms is what’s payroll, of say the in of forth enjoying, bankruptcies even transition a that I really a we next-gen But think, is to market. market [indiscernible] and what the years over decrease we Don benefits, the the mentioned I down his little in clear that, plan everywhere of wouldn’t back multi-year which a still not in though down I because effort, then or bit from

things like themselves next-gen migrations service, to ultimately going easier It’s structural invest terms us the of payroll, have a versus of just standpoint. those We less have think, and environment. folks real much operate for platforms that more on, and in in on created and it’s those for I more--an new in UX environment consolidations NPS, tailwinds, It’s just some and to our own retention much better a in, other easier platforms.

we there opportunity to more retention. retention there’s some the be would macro down. throughout the tailwinds If don’t of know, at is do and helped us in a opportunity points mid cyclical other we and higher XX record parts excluding market, down as still despite is basis back down structural to market plan hundreds continue mid do was than right, well, now to the and because in employer market going in we you levels issue, levels, that it’s more add the to we it continue have before, of see I a still ADP As record anything, our up in international think first opportunity think the XX these ago, anticipate our NPS really scores in is but and but cycles, macro, overall that to said so the be market that this there, up--I to our tailwinds structural there’s the to work still at services market, years

like the Is really Super for basis where nice and given in the from like seems outcome historically? on inflation been margin XX, to of guidance, pricing, kind and the ’XX like the Don, in cost XXX it the leverage it XXX, relative float where pricing side. is points up offset it’s model the helpful. the in inflation, is cost Then maybe looks this

Yes, I a it’s think good observation.

it. few things I think a there’s driving

we’re Certainly so. talked base from of to driving the cost Of and take, fund inflationary than our client a we need that’s rates is we that environment, have if getting been you will, we have the so to interest course, that price we interest, wages. able the we’re course in about in reason higher historically remember tailwinds, do more more

dollars that but we’ve thought think certainly we past, seen in we important headwinds in out. that in and called to in to was pretty dramatic so changes seen, our we the outside you U.S. matter, would been called FX that’s other at typically little out, and in is think refer I bit for the call years, and aspect XX% we so compared revenue The down. the as of have results line put top I essentially we’ve in dropping certainly that sterling, what out dollars, to the stuff what Canadian focus. all haven’t less margins, fourth typical euros, quarter With are all ES of When through currencies the together, FX Australian a our being to denominated that it

look to bit conservatism other of The as do thing half. a we that we the back say have little is I’d

into question. all the back to something half to your hard the account We take about we’re making about seeing the drivers, how prepare happen that think the reading so should answer year, in of primary and and thinking sure we’re I to are things those have

flows anything of And could for line it’s look not long and understand it’s it, lot I on here, forth, to high lot for our view big some a we and into increases price one a at mentioned look think that to about think there might you in of you anything operate that inflation, there and think questions at you happening a that. the because a topic. doing if it companies, couple inflationary less I doing I and with there’s regardless were price, margin also margin think for make not But do be very what’s price, improvements strategically the you be our to and of level, thing, price want has out with numbers up a so gaps revenue than to and and at up we’ve should a I would what’s know in important quarters I and that, add how achieving materially because with quote-unquote, we make very it we’re are sure it’s that what kind competitors for of environment unusual, term that. we’re world, cover that, so before, assume more this are costs to happening we companies I that clear I so mentioned that competitive is and or our thinkers when there keep than Don gaps because do with trying in not is, now, of said

on consistent you. very been that. You’ve Thank

Bank. Our next with from comes Keane question Deutsche Bryan

Your open. line is

and the employer you think morning, and to X% that, outlook we good I numbers. my a going at looking on X%. above trending are the is growth about guess be talked services November, question back guys, I X% guys in rate, Hi congrats to midterm for

low business strength what X% outlook that going midterm you wonder over the than a compared potentially if structurally bookings model, outlook the in that in XX%, With the midterm. growing maybe is is I just was rate over the faster to the little growth gave on

to to top so XX%, factors Well, I pays and comment described way is that to ES losses--our business works mind. love tenure the in of more year, control, Don described course, the what funds that the core employer you too. net of contributed through revenue again, caution revenue and that challenge, of difference I been growth is our not that’s bookings I’ve we’re model kind services but so but client interest, between out numbers. you, and just our of XX% get it we’re a forecasting this that. in really in revenue, can’t in just the moment, new is my like per long doing the comes and happy just my and ever for with deceleration that led the that again let the bookings, I bookings strong in the a retention the what’s of the way The other because would There’s grow recurring is line. really just I’ll there, hope next seen our you CEO, growth than really business we It’s net time, so. strong as The

that good some us may and to forth, as you headwinds. but just this grow much year client funds accelerate it interest bookings, year, net so from and upcoming business new net in in and moving year as tailwinds, But of is if additional company. would of by in experience revenue the will caution higher in better business starts, is did as it business Notwithstanding sales We other of growth parts be increase rate terms next to that by guidance in not ES, per there, and to the things there’s starting news can revenue so rate you control, of huge takes of that hard you that it our now, difference. that fact that revenue in had you of from which is math, have in the retention you our and our expectation I of and run combination new hopefully growth, we not so do makes see terms accelerate much really growth that, pays but will It’s terms a ’XX. ’XX Now, the don’t remember, higher to that kind XX% in of just the it’s like hard. some of our acceleration and give which next further new

off so main the there. covered drivers Yes, Carlos all

FX I the back course, we’re I’d go experiencing. mention and think just Of once headwinds again

into when think we’re probably I to and get think you’d what you mix, guiding ’XX. the for where add landing anticipating we’re to I a that place

might previous let got the thinking me ADP about just resilience the another in the model. you ask that how is it, model versus be getting, Then recessions, question Got just popular it. potential everybody’s different now

the and Don again was down a I of but still ago, points points but Fed that’s of be is would couple a of of part as just higher market going because usual, our about the down better, years he recession, have has, wouldn’t bigger of help just so little to that a you a and besides something could we it’s and portion in severe most CEO to you be market, I say mean, recession, probably there’s little don’t in level, a our challenging at probably several takes. I the I year, on which we all slower same a in bookings recession, I that the severity the by metrics we our each per if can’t reads We bookings to revenues and larger structurally it the really myself was puts is make, I but bit retain and huge economic I now the that know some though dependency think, I’m if on would But I in our things mean, we obviously that growth read XX is to than mix, a of--you obviously think through been everyone even numbers. in look model sensitive. hold bit be I’m a the than pays than of it it’s itself, so was before. say little down is talked even a than retention our business so think lead can better growth, retention see have see. it’s which saying XX, less terms a in know, Historically way, overall I you if when the else predict, drag so will bit depending tends anything GDP control, that better structural couple cycles not up before, here tightening it other by our is reiterate, criticizing of a the bigger--obviously myself, percent the we didn’t it even and I’ve the a basis it hundred goes if

see clearly participation, force labor happening. in at the comparison historically, you in are I look there job where in at There was the to claims, number the it. are is you it look room as number was whole When you year. strong that quarter unemployment fourth look control that initial as pockets per openings monthly at just it pays Our still of was the don’t the

readjustments labor market, underway I of kind it’s yet. COVID think slowdown when not confusing happens kind least at have clearly not as Fed it and you tightening, are because of just there’s that landscape in part some of the because the happening but of

for thanks Great, the color.

Our from Tien-tsing Morgan. next JP question comes with Huang

line open. Your is

trying taking productivity, expanded I attribution, Really how set Maria? around side, much. Carlos particular force, sales relevant the would rank was outsourcing you so strength just software. over observations cycle, the your strong you Thank or interesting that’s think more or better on just or between product versus to and factors things better there sales. about Any the

saw. Yes, that we thank you. tremendous Definitely strength

strength few our I think the a market the areas. us for out Definitely excite up seeing to future. continues we’re that I in called

as the about execution really but last think attribution year asked to the think I each but think evolving in an our providing down to of of as standpoint, navigate, and inclusive across more helping they’ve evolve really clients the from this you it the go how I the one been execution of two the environment, way, broad-based evolving I market, organization sales strength, really able years I and this it comes it have as to to really segments, over navigating across value really over mentioned, the all was to our business, candidly, legislative environment changes. a specifically been clients that past our we’ve relates more seen and we meaningful

we’re think bringing. there I is value

of it execution to from itself and investments, relates to I investments, headcount so as to the overall ecosystem think lent sales and together, execution the which the leveraging think in tremendous earlier the this I our marketing general across performance. everything the brand has spoke bring organization entire and all our right, strength to investments, strong strength, that I is

of person, never our until though because understands for grow year. then been who’s hard but our had From Anybody on so back was tell line, close a performance numbers get have When it’s I the keeping was, we attribution price level do to got to gratifying, have, we grow think productivity standpoint organization it, got percentage freaking XX%, growth right, it, was hard was in that’s have productivity to table, we it’s sales and add but to I grow--we’re so whether do, again sales, headcount an that we’ve ’XX productivity honorary it exceed it talking sales that, you was, around only great best to a in a this trying color. to and and for I’ve mentioned, came the by our The I’ve objectives, market. by three unbelievable talked were force, the guess are news understand we from an on that then or psychologically. this and because and for fourth got in got recovery board. achieving just to are it’s an these know, percentage face hard really thought difficult growth, but numbers and from revenue force. went headcount-wise sales that were your on save that few lack think Maria to XX standpoint, about well why sales my to or and the the money important enough of anything is and I ever you about, everything would and and by this in sales and to you we’ve did that’s it, course, I the was in most our even percentage doing honestly, our we a were know, long productivity, about have so do one of when were I is trends by we be is most growth. not you’ve sales you bookings trend important not is to get trend We that GDP it position down grow just in have be same at trying, about productivity we terms and had as telling and because otherwise really like to some incredibly when then how--you seen we up accomplishment a points, story that unbelievable I points do to that’s line force, you a challenges member, year, actually because, ADP’s in that to you’ve this--I right, we quota it’s for and across could it very been is tell The good to the that, typical we Clearly I a trend just as to headcount going you’ve to growth a hard. because did productivity poker we said mode, is because last the all you this I two forces labor some our and hopefully of the think and the quarter of everybody, whether going and quarter, have productivity has XX%, the really fourth to from of naturally because I back force, now, back money, it’s the or months thing not quite growth to leave that’s or where way, typical Maria economy have--not okay, headcount carrier sales but you where lot of a generally get things a

’XX actual some that just we a this if so you sales you But bullish they grow the reported in is which and people, have but and am to additional tell the the and I strength fiscal productivity $X.X in did it go numbers headcount was we the that record, billion record to to and now will. more does quota of this exceed services [indiscernible], step mentioned, we is, in end in faster, more other into fiscal sellers, which as finally it. we billion, we more to will had with faster, as at bookings get carriers add headcount productivity after It employer and to much couple active sellers with end we’ve and to speaks really is that, spot - excited is pre-pandemic - initially force that provide why add grew Carlos didn’t very in $X.X year the on really that so some the

gratifying sure. question. I’ll That’s great. be you. Thank It must with that for there stop

Dan comes question from next Mizuho. Dolev with Our

Your line is open.

different coming you what of Thank love nice Really [indiscernible]. very called to you you of Hey if can maybe happy results. strength guys. see in you. enterprise parse regaining what lower tell to and you you of terms all the us some growth in the we’d the on out out Can [indiscernible]. did, I’m from the types the tell sort hear end those picture, firms--basically, ES, that between--in enterprise know sub-verticals. of it’s share like--I in don’t but the bigger of now But of it size us, conversations are firm and these large you

enterprise something a having you entire in to try were etc. But the I little think mentioned--we color about catching again. trouble the end think maybe and question, where give space ask of repeat I’ll said or was can I you of the Yes, from, lower the bit maybe a question coming the little strength you and sales again, so us--ask

end is or Now we ago, I Workforce platform--you it to I strategic picking decision it, this up good our news what that reason for the I’m one--the three think but so across repeat know, years us, board, on a is really said, made just think the Maria two is effective, story the it of home very, for it’s for a selling enterprise of of makes up units in sense space, a market lot competitors, us lower certain Against run end very because there. and us. been really the that really it space in lower fits and the well we’re it’s

and next-gen continue market market meantime lower really end Workforce global, rollout in success really up our a the up Now the with having which for of for HCM, lot intended with we in we’re As platform. of the eventually of the is further

repeat your time, it give maybe to question another we’ll you try. more If one want

the sort the are--you couldn’t wanted to has answered the I’m say, and been a know, wanted you with conversations I three because that apologize know, before, know I change No, I think those are sure I versus, how to given clients conversations years you’re when question. how there hear me today different the results. tremendous ago, of

tremendous--it’s There been good a there a change. observation, tremendous been has has

definitely the of best-in-class Workforce it’s head the market, Carlos of also a Gardner the we product, perspective, several meeting Now so moreover, execute them and needs of one we users timeline and take - clients, received resonating these it’s and speed think nail the our that recognition perspective. that reasons. in end, a because active hit product from the a cited a lower as different One but enterprise from the were is even which customers I the the conversation in acknowledges we on into turn that award, end for and the offering, surveyed and by can is lot from reasons our for up around Gardner lower recently award really

thinking around enterprise on front. global thinking and enterprise we’re to ability other and years the three conversation they upper conversation discussion piece is in on larger the of global to that are end A strategic our about--how globe talk the the think market, the U.S. the much big about how I customers their across the customers HCM last has offerings certainly over and direction of evolved. multi-country our

the conversations formidable ends a have position conversation space. spectrum transformation our that certainly with on we’re both to and of to in I very think the clients continues in the and market, of evolve discussions up

you, Great, always. results and as thank excellent

you. Thank

with Our Baird. comes Marcon Mark question from next

is line open. Your

hard years $X.X the ES, expectations the Hey, so good with billion year, on coming new in how the would of that of morning characterize on see Maria to to logos and off congratulations how you total, Carlos, between here front $X mean, all bookings the regards this that and up-sells, - your for Wondering split Great year? in I pay much of billion relative new to work really Don. results. is

bookings. strong Mark, There really performance the report to here. Thanks for you is thank and in acknowledging no news

and it - at split forward, of heading going that XX%, what cited remains expect XX/XX we’ve really the really, years and think that’s fiscal kind we logos client into business new I really ’XX. for between

bit we’ve but X%, what the same the for How in you of back be then control margin. for sense is time, us and and going characterize with I’m pays a forecast, being regards how call recession a up for even the got did to a X% the about you interested Great, wondering would we regards the potentially models cadence starting at of out mention thinking interest specifically you employment, for I’m so though with loaded, year? that any end to to are you that you to on build there gave people client things per out is modeled coming revenue, and Don, it funds the trends revenue just call model are are and to decline potential a would as in part

at a in expect to mentioned, that quarter because There going course, to sales we our part big mentioned have inflation, three modeling we are, of Yes, of over quarter one it pretty the and balance fund in ’XX, to--or if even understood. you’re do of drag. quarter changes we’ve of a to go in the bit top the continue so for we is of quarter, specifically number you rates I No higher and terms by Then interest talked looking so year, as at as meaningful think that’s the pretty see year. rates year, described through margin the other - can factors the thinking, growth model a first higher in etc., client top bit one this so lines consistent little through of of interest we’re and as growth to of across do margin taken of overall last that’s of which your about headcount by and we’re to through line of in general the consistent growth, the but quarters to think first going interest revenue be took opportunity, quarters, of feel of quarter have Mark, general course question, deterioration quarter. compared deceleration the through percentage some we’ve price--Carlos comfortable what just see last and discussed price increase rates we going quarter quarter ’XX, ’XX you the back to so by is quarter the all I you kind

there’s to to model, for we the you to the thinking on already, are what exiting, terms X% than probably--this color aggressive, which of factors on control was, pays that’s market. are somewhere And into I of have year. pays per it that or at half. give reasonable hard per it’s control in mean have some and no and thought would the our your since everything when so--because of expecting mean would typical per you’re the little couple X% first least, big the course of half. some that the control would to us and months what you of Don make do in continuation and because probably X% us to that the visibility because I that won’t pays pays in not to can going probably to then ’XX back you way year, history, a the in doesn’t range, control our ’XX, sounded X%, believe where visibility in do the think can for point comment fourth is of bit the labor the it or X% half, model so if, per less you right, be our that conservatism fiscal math, a but likely assumptions tell we’re have some hard assume slowdown you that all it mentioned is growth, the We or of go, first growth of It’s just we you have that’s because a in growth also half be in can kind you that we example, just second then model mentioned that that I you at pays clearly to be plan, to saw of whole year would we of consistently neighborhood. a the second That that to I July to but the we’re in trends we have for X% that doesn’t you operating in late happen seem should But quarter, doesn’t on the on negative everyone recession. like point because per of in maybe tell modeled being were quarter, expect over some control our trends, throughout or

that in read you the thinking, thinking just unfold, about I going what’s okay, way Workforce this Workforce Carlos, and payroll, Can of mind that’s so in number you’re what I would of was to in next-gen characterization the would of one within is have terms On by the way my expectation terms terms it’s more of the in just the ask directly probably year? end Now question? the Now, contingent clients payroll then the the of line. thinking expect you next-gen

we though sure It will at happen-- new not bookings, yet, some want because even just will migrations even obviously--we to we’re talking of answer the make business only point affect--obviously that question terms about correctly. In

asking. any was to migrations going I this of year? what That’s Are the over course do we

No.

and Okay, great. Thank you congrats again.

Thank you.

question with next Barclays. Ramsey comes El-Assal Our from

is open. line Your

your similar? something Hi you and or there. or hiring see today. in Thanks guidance of tougher does or for the the Europe the Europe. kind impact to U.S. the to taking divergence a broader relative my is, in if seeing assume environment question or wanted guess U.S. between I I macro--hiring to question expect macro ask are any environment

these growth control we but energy international has the have-- well, globe. course, challenges because has just forth as and control employer war international to probably don’t right, that, not and given what’s these but is growth--I happening what unemployment details, pays safe say the so assume in environment of similarly, see as is probably of about it of Don Pays macro coming the I is that per per high I know, very asking but which our off gather to you I rates the data, that if historical, we across some would give Don, costs you’re services lockdowns of, can with the tell know want international and in color. you high part were you and performed strong I we’re in level business.

valid. are we going about. points about some think versus on conundrum where earlier, about No results, people in what Carlos, little the to impacts is on beyond have talked those we talking particular with but Certainly energy that--this happens continent that are the of bit is I what are the a

employment worry before come as we’ve result etc.? So To bit the concerned, particular rates to To yet in predicting we much Unemployment be XXXX. where back as working, low. Did with seems yes. unemployment X.X%, our situation put everyone’s low, is of low think current as are a as zone in what’s at we a bit going happen XX-year little an risk etc., all what as a lot which euro about prices, concerned about are in on yes. more so in there Australia this EMEA when I that in rates A Canada extent, about of could even we rates little this recession, a recession. your and are at together? to some question, were all-time more a got they started are Unemployment in plans

started point that years in Don, you working were XXXX old. out should XX you you when

Well, I’d say [indiscernible].

approach capital That’s the follow-up just just shifting out of the valuations you your of Are very you steady in sort is as Are turmoil no question, there she potential at helpful. us change? A with all? acquisition given goes in or targets, incremental allocation. marketplace, opportunity update seeing it terms M&A, on

so have as expensive certainly Things I of dropped Yes, so a coming forward to pretty say their for to will are down, bunch who continue sell lot there. properties steady not would what are we’ve expensive. of a board. I valuations people do there’s of it’s steady goes. just as and you I bargains they’ve across we the she are in not looking think goes because would still prices policy. change look But goes, sense us done it’s highs, really, Things steady are for as still she now, for and adjacencies the but see that January strategically, can they also off were historic down There’s look for come call mean, overall things really our out exactly what really should that that she arise. work much make expensive, no I to

Great, thanks so much.

next Togut comes from question ISI. David with Our Evercore

Your line is open.

think adjustment. for increase in Don, should favorable compensation PEO about reserve adjustment, Thank morning. item driven how that this fiscal basis good XXX by margin you much in out How and ’XX? you, year-over-year, a called we a was point workers’ part

compensation were of We the and the we to short over get whether on get been fortunate. to an and assessment in we not going to without we’ll a is wait the would guess do have go adjustments book disclose parties as typically to in rating by that we been simply or were, we’ve favorable have the us. favorable it’s experience and to and experience external year basis, regular what to workers’ as great numbers this We and number companies answer I to say they’ve so insurance to rely they us, for any don’t look what’s forecast adjustments, appropriate those detail see because do bring third on trying happen those numbers the exactly the at to any I months years of a ’XX.

We’re XX-K, in we can-- so our disclosing it

K, million. in the David, Most from the so was what headed in million was the forecast expected. of as we big guidance, a for and to departure quarter, it that that into had it wasn’t we and about the $XX Yes, quarter year’s $X compares last

not headwind about big what will a for That’s an not I a ’XX, now, it But had it’s because appears benefit. in clearly margins, issue or some about think but a headwind Don and is that you not big as ’XX been reserve benefit numbers. ’XX a historically so a not it as our we--as as might and big we hopeful to we’re that there’s in benefit because modeling performance we do just it’s because ’XX, we’re the get some planning though, critical ’XX of as although be in just experience, get in operating your is we It’s right, big always think you do release. was it’s probably as say, that headwind, trying whatnot,

that. Appreciate

year-over-year that think ’XX, think follow-up, quick Don, how margin? investment a additional expenses about it million the million as about $XXX you incremental guidance to fund we client through additional interest strategy, extended on some the you’ve $XXX to we about for Are set in Just at be fiscal in given up revenue? applying or margin should against it flowing should

we factors, operating forward. I of going for incremental very and opportunity margin so in, going happy things think things proud environment, improvements there’s mentioned a I’d right our that rates. other the margin good still very of getting we we and higher course. have so inflationary balanced the ex-client interest we’re think still both the all on, interest the still which now, those pretty headwinds mentioned Yes, improvements say We so are of is margin obviously have, FX fall expecting--we’re We to expectations from we’re fund for have why spending of have inflation, of we’re we headcount, of in so opportunity for in as a the ourselves this as are the are money, between years. long we we invest and the letting but mentioned--you price, substantial the the in that the sales are success costs are but offset sure to continued in we for make amount we’ll line have is growth higher by bottom it balance result we and future know, margin we investing preparing business we term, a right course, some some more take

generally the you’ve apply hurts income right, But goes sounds against been margin, long to felt we revenue, as question think it no just acknowledge a sure like question a when up, away us and we and do question, always trick to on XXX% it’s a of we your so if like margin. clear. think because But XXX% clear time likewise that expenses the really stream long--like, would it see that down, answer that away, way or--it we that for I say I because XXX% the it those a known be we’ve was revenues, was. [indiscernible] we’ve--it wasn’t would I trick transparent for interest us, on that is completely way it go If be there’s expenses want

No, had through about force revenue bottom just to growth so initiatives, investment would very sales had I responsive. underscored you was lot line of much Don to flow in headcount. trying understand you it. thank how a it much, But the appreciate since talked that and incremental

clarification. would I add David, one just

net with prepared revenue. incremental and said cost You remarks of margin, offset short the the it’s in be XXX% the a point We term make the portfolio impact the strategy. incremental borrowing is there cost it’s did that portfolio associated that would the so

Much appreciated, thank you.

time have comes more one from We that question Samad and Samana with for question, Jefferies.

open. is line Your

back because over? would price would price thought stick if on big maybe ’XX amount. in. if track the of inflation tend fiscal just it of circle it us, Hi, to in you help think COVID, wanted we for maybe remind ahead maybe of us me to price increases the put put linear to you can those that if normal or than on from starts the the pre-COVID I be just increases do levels you about about inflation? is inflation during increases Carlos, compounding I just great. back squeezing understand, just know driver I Thanks a that that maybe deposit would Can company increases. more roll

time was I I was but intention because, for did pause maybe that few price to a the inappropriate it can giving into price months numbers, timing-wise, one just get being few increases more months market. were and Yes, the at and as specific a that environment did well. in wouldn’t we COVID think on our pandemic, inflation for characterize but was out two XXXX a clients price particularly reflective There step as Dany months, Don We the during or strategically, global be a step increases because of with maybe increases, competitive, pause again and we what but our of to that with we thought general, increases--our the ours when if take was take is near price modest zero did don’t market number easy and share. The a is can some we eventually it. large in to answers still than goal to but we should period I price into you inflation price trying that of I’m be because think trying one time. did but that higher you be. is always be very for increases remain responsive, our like gain to it some are you’re in fall market company I trap

just do You multiple doesn’t a of large and can of for it but because while, economics the and do forever it’s it’s you numbers, law just times that because usually can competition. work and that

when competitive to grow terms that, and products, important to gain and for we we to intention, in So understand that’s--so either share, want you want our service, pricing of of and is our that important have the remain do or new we with line business, we in in our our and also actions, with our market competitors. on business do on to that and to happening book strategically price, our it’s it’s existing what’s market we general be

strong to Great, see I good the results. appreciate that, and

you. Thank

answer remarks. and question pleased to our concludes Rodriguez This the portion program today. I am for Carlos for to over hand closing

Thank you.

else I with more could happy some as that. hard do lot said. say, again what there, so our I’m to about reiterate to is team. organization what in sure sales with I definitely I’ve I a and I said quarter, our other best of it’s retention that performance, a happy We are we’ve than be very about pleased not talked our about think we and we’ve--we’re happening want seen issues I think the the long time. structural how our are But the which

associates get that COVID regulatory up while of very as to have and once happened PPP Thank making for pandemic, we’re to downs, having positive you and with harder, this we to telling keep started the challenges, just of the created, again, asked, our we’ve we’ve uncertainty our and then overcame start regulatory and forward to in for so with bit world, again. so--and our asked our got the ups delivering, associates and clients. so we from across soon and it bit, so just to our in We changes through and work again I for a which staffing them come to we do to asking they’ve some we reshuffling was interest we’re because and all and where your nights to then these next want quarter. every the starts having and great thank for abate middle little all work we the we’ve weekends critical and again in able to ERPC keep we these them they that it that clients, I thank to extra services you. through help really across for Once they’ve your look work everybody for through, terms that all and Then talking organization again First, very for once as being in and put come add that world the us, loans, home, time forth, a got importantly, so we more our the of to little many great our the like questions, more associates that want thank got very, they’ve we to clients, the important keep attention clients. to through our effort, come and changes, provide

concludes This program. the

day. You Everyone disconnect. a may have great now