Automatic Data Processing (ADP) 26 Jul 232023 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 2023 Earnings Call. I would like to inform you that this conference is being recorded. After prepared remarks, we will conduct a question-and-answer session. at over would to given turn like be conference the Mr. will that now time. I to Instructions Danyal Hussain, Vice President, Investor Relations. Please go ahead.

and Call. year. Maria our results Thank Fiscal our CFO. Earlier CEO; Michelle, welcome the we ADP's McGuire, to you, released morning, Fourth and XXXX Don Earnings our quarter Participating Black, are for this today President and everyone Quarter and full

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

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

strong full ADP. I'll XXX adjusted EPS points margin We with our XX% year basis year and we expansion XX% growth, of EBIT everyone, Danny, revenue another the highlights X% basis growth adjusted from start for And included adjusted revenue thank strong margin Thank XXXX, for representing quarter. some growth. EPS you, fourth that constant of delivered organic fiscal XXX the for points EBIT currency closed and and joining you, year us. out quarter a currency adjusted XX% with organic growth, expansion constant

on that a demand. healthy and marketing capitalizing growth macroeconomic excess well gradually in strong of backdrop, growth and The HCM has our was this team Employer been been a despite we Our environment Bookings demand study double-digit comparison. worldwide expectations delivered overall with top have difficult new of QX business Services, exceptional sales slowing on

were QX market compliance and Employer had bookings our in strength mid-market finish great better-than-expected from international strong we We a full bookings results in businesses. results our growth our X% we continued as Our and compared and broad-based. as Services X% year offerings, This had out our Investor to brought well to also HRO our down X% our laid performance XX% Services X% goal growth XXXX Employer at to of to Day. our medium-term guidance that

the of with are, keep We going. and to thrilled course, excited momentum this result

was we another came highlight QX Employer better in retention rate in Our than and Services expected.

specifically was driven For our the overall satisfaction our and and strong result market absorbing the full major level rates. back delivered year, to U.S. points business of record-level quarter. impact retention across retention record in record of a increase out level the businesses of XX.X%, international mid-market are all This businesses in basis rate client rates, normalization the we by fourth in retention and down while rate of our XX by

as the quarter labor show year pays full bringing growth overall resilience, the figure X%. control the was Services per X% continued control Employer market Our to for per to pays

further growth were in from pleased pleased PEO QX, strong quarter. bookings we such experience with quarter, demand acceleration line another double-digit our see labor have PEO this And performed sales expectations to last, our We clients. growth in our record while year been durable with revenue to all representing a level in

their them clients growth complexity HCM may any to to growth outlook, by from tremendous our financial will for of and of apply wherever in ahead. cover I nearly see I on, few while local Change HR drivers to be sharing X on strategic priorities, Moving growth are XXXX a our us. breadth global, front face start-up enabling from And in are business, address HCM us From in and there enables meet fiscal and the all strategic we outsourced, initiatives our wanted our a minutes our to specific critical enterprise, growth look the will vary opportunity priorities which as challenge key they see fully to spend ADP industry. Don secular And across software-only ahead. journey. to that we while increase may years our as

life simply, will with very lead help best-in-class the goal and to first priority paying them, retirement. innovative cycle payroll design, training solutions strategic them, and for clients setting full up taxes The them put our filing employees that providing to is the From of our HCM is even deliver onboarding to technology, them best and develop most for and hiring employment. navigate insurance and

innovation products, offer HCM see much As our we solutions, expect next-gen to XXXX. and offer used to as tactically improve have inorganic fiscal we incredible and means opportunity to current and of on a today, to an industry-leading further continues accelerate and our busy we pace partnerships

For registration, compensation, U.S. clients, help our policies out management and product clients including small service-learning RUN will enhancements serve that to utilizes AI insurance to a help small manage business inspector their with rolling annual that an businesses, training we new several and tool employee audits. XXX,XXX are workers' insurance tax ID

step multiyear representing more U.S. X our platforms. clients remaining the move in enterprise to an Next and In great Workforce of to momentum platforms continue our end to by expect of the legacy the our Now, our finish our modern even and Payroll nearly drive higher. served and businesses of fiscal by to rates the journey space, midsized our migrations we win is deployment our important time of client to U.S. satisfaction this Gen For in focus engine year

launch XXXX, business, and features am our incredibly XXXX a to Gen expand Roll, year. to Europe certain product Now pleased payroll our drive excited there, and are we Gen to fiscal growth. We our time in to mid-market help and continue HR to platform adding we a platforms, growing iHCM that in more growth offering Outside from the Pacific quickly U.S. including in share sales mid-market Gen bookings U.S., meaningful supplement a to deploy XXXX. outside we and role in at Asia easily X,XXX Next our will functionality. plan to also to fiscal of our part course way by we We its reach the across the HCM X advanced more acquisition have Next implementations, velocity initially in And Workforce existing of tackle few the intend expect to our strong countries over AI-powered clients our to incremental least the fiscal and HCM transactions. contribute our intend also of we I in leveraging begin to in recent intend clients scale of our

and Our true strategic to serving each partner provide to pride our on clients. priority one unmatched ourselves X clients. We as second expertise million a is of outsourcing and to every our

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approach into and continue for Our has decades, key lean it. formula ADP's to winning been we to will expertise and partnership

a few ways in expect that in fiscal to We manifest XXXX.

service implementation these more of begin fiscal number tools our better been powered experience, in XXXX. an even help and we deliver by broadly early that associates deploying have recently piloting client We and Gen can AI a will

very clients clients year, of our And expect year the with number in clients strong. significant the a bit learn to might we existing remains longer-term we experience the onboard quite about we and and outsourcing AI. Meanwhile, ones. and solutions new every are realize from focused HR for reaching for interact improving XXXX, benefits we Gen this our on fiscal further Given demand

have to in data an fiscal and is strong be existing our our retention bookings continue keep momentum who performing recent And well, focus at client machine and satisfaction to strong levels, to perhaps our learning levels. bookings reach a incredibly and delivering use clients Our our new maintain Employer Services focus fiscal HRO PEO strong our upgrade. business by businesses for is for to add headcount, grow may current sales or to been continuing for ADP record even XXXX and fit partner network, XXXX force identify referral our and

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tax our scale certification a This scaled provide and authorities, clients and XXXX, not and for business-to-business world scale the to only in in robust the Across bring continue a commitment requirements. Globally, industry. we globe, stringent clients. and local and combination on but prospects requirements, legal routinely unmatched in we platforms integrated of the the governments on-the-ground biggest forces the size navigate top solutions to stay data also shifting will build In a of best XX and fiscal expertise, of to ecosystem us meet array offer presence benefit incredible countries. the are industry-leading and we world that over help our data Our on and together interact to work. unique with our sales complex service in and of in one partners positions and of changing and we

to we of the thousands platform to ADP in in new potentially multinational After largest reach acquisitions on us as our we X tuck-in presence XXXX. to XXX companies expand GlobalView over scaled we expect add in footprint. workforces XXXX, to serve world's helps up markets XX in-country expect fiscal expand GlobalView's broad and enhance Our supports hundreds more additional countries and both platform make further we Celergo with native countries. In as fiscal XXXX, an in in to countries, our establishing in-country

AI scale continue world in and coming being XXXX. ADP more as to benefit will plan priorities the with and we to year. insights before globally, X,XXX effort past the serves recognize to and grow more excited employees growth for moment and it provide few investment about the global over performance functionality pay their this turning data-driven our and over distribution, for than drive. But people and we've our paired growing ability a as to take I continue around you incredibly will with with a tech clients be ever. serve world-class XXXX, ADP, best-in-class differentiation associates power by to to enhance our led which sellers I the of stack, will sales Gen to and will Don, in is our months. course they clients. continue in wanted sellers our quarters, of over And to the X insights headcount to likewise we in number the continue Our marketing am of fiscal by supported continue shared the strategic these we And increase

role important are by year, the the being for the Magazine world's play consecutive and culture and strong results most values we core the Fortune XXth driven. like service recognized company insightful fiscal was In we XXXX, incredibly have associates expertise, the body ADP excellence Our in as world. and admired signifying

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and our on cover then expectations. Thank around financial at you, Maria's I'll performance comments and QX Maria, expanding our our good results by very above driving start fiscal outlook. everyone. fiscal strong overall, 'XX XXXX morning, was QX or results

constant for results new healthy us Employer organic and Services control per these $XX and Services in in pays PEO bookings, Employer continued Maria yielding revenue. growth better-than-anticipated and reflected retention currency bringing growth billion to mentioned, year, Services broad-based XX% the As Employer revenue strength business

outperformance Services growth Employer revenue funds from both constant the better our and the XX% interest. was a well organic retention increased than quarter pays contribution on anticipated as stronger-than-expected continued client per segment, in and in function basis. control currency as growth For of revenue This reported a

was Our points our broadly fourth XXX basis the line with ES in expectations. which margin quarter, expanded in

benefits and Growth For the basis XX% driven which client we in currency XXX and Score revenue interest a on our ES to our basis constant a an retention fair our grew headcount, some and funds amount year year, in sales, ES substantial reported points. basis, and results. on organic has expanded XX% full a Promoter Net in service fairly in us product, sales added which helped margin

points decelerating with has XXX,XXX basis For line by growth to as slightly very employees in for fourth our we year-over-year and expectations supported quarter, strong margin PEO, in QX the to contracted anticipated. Average X% a in part quarter, revenue QX. basis increased increased higher from gradually started selling PEO to the on due our reaccelerate bookings worksite XXX expenses. X% in

all and now X% our employees For 'XX. and turn for basis PEO the in grew recent expanded full guidance. I'll points, year, XX increased our line with X% our most fiscal average outlook to revenue margin worksite our

solid uncertain, positioned laid we priorities results economic the to with backdrop believe investing well while that growth, we for are strategic financial the deliver also consistent continue to future remains While Maria out. overall

outlook revenue, we Our assumptions. in driven moderation economic activity to fiscal of segment following expect with of over the the by 'XX X% the ES but X%, nothing year, some assumes course key dramatic. Beginning growth

growth We fiscal particularly growth strong X%, to of expect business after X% ES a a new bookings solid 'XX. representing

now, For the first half limited environment. in half macro which a is think prudent stronger the we're and bookings moderation assuming growth, some visibility given second into we

For 'XX of level at fiscal ES finished our throughout we XX.X%, the year. record retention, expectations outperforming a consistently

that 'XX XX from contemplating fiscal higher said, assumption other to out assumption this very today down course, business to market increase basis decline economic retention XX where from are with a businesses With of an are an points slightly from we part strength will levels are, We our general pleased with small elsewhere. as of impact as overcame due ES that a we performance as they in slowing losses for well to business for backdrop. headwinds

to our to which average pays bit funds per expect average move expect ago, in months point, gives we a fiscal X.X% to reasonable due course and ES above fiscal current more modest a to months, balances fiscal contribution a from than been 'XX, is client X% a 'XX. control still our X% in meanwhile trends at $XXX basis This wage 'XX are increases. expect for those of XXX growth in 'XX. moderate range fiscal growth normal dynamic per interest in net contribution our has important million X primarily we 'XX funds Putting see 'XX. lower We the to 'XX. more had starting will, potential revenue, growth X.X% an the yield to gradual yield we below points. And revenue a increase past to grow At in our in basis and year is these $XXX and of which increase client recent 'XX. Meanwhile, to outlook client we course, in as pays forward we fiscal of out forecast in increase our fiscal price of the few client assumes as for X% our 'XX, time. funds deceleration fiscal the from contributed around growth recent through to we And smaller reflects revenue this and the revenue assumption million the interest $XXX evolve backdrop in our us together, X% fiscal year. expect control called 'XX we historical strategy $XXX to growth over We 'XX, keep As our interest from from fund to to client interest fiscal contribution a curve, impact million QX, to though rate of average this strong the $XXX for for anticipating fiscal points for funds point the feels range to million that fiscal in $XXX in it mind solid a XX from million

investments across our by interest contribution priorities. XXX our For basis by increase funds operating revenue, an points client margin, continued to ES XXX and from we leverage offset expect driven strategic of

to Moving PEO on the segment.

in long-term from revenue client already in growth. With worksite by of X% Strong our as the been expect driver growth that for as X% employee to but our performance growth reaccelerate excluding offset revenue has 'XX. been growth accelerating revenue X% worksite bookings growth margin so off and strong our reacceleration PEO PEO growth, of slowing we pays X far demand outlook per This grow primary stepping has in QX. X% to shared, has confident opportunity PO remain the a to gradual we're Maria growth, employee control well. We fiscal healthy, PEO. contributed The continued in growth gradually and And represents bookings should to average X%. for pass-through is

experienced and down adjusted compensation expenses headwind growth release is basis benefit a points revenue as be XX X% to X% we consolidated our XX reserve higher than And well expect fiscal in 'XX from 'XX. Adding up, XX is outlook year-over-year margin EBIT points. due workers' basis for selling margin fiscal We expansion in our for to as anticipated in between 'XX. all to it fiscal outlook to PEO XX lower of

effective quarter-to-quarter, year. Thank of tax XX%, in this expect to be the fiscal a QX on supported total for Q&A. but the we At quick consistent the note growth be point, to 'XX adjusted basis And growth on margin by we year-over-year EPS our I'll be We and to expect cadence. revenue adjusted EBIT it expect to buybacks. expect of now around to XX% over relatively and rate our we One you, turn for down course build then slightly back operator XX%.

question with Instructions] first Barclays. [Operator from El-Assal Our Ramsey comes

on other bookings if This of there question X% is for PEO that provide is and fiscal of just expect Ramsey. there. just on projects in you any revenue I if guidance. there? taking was for spread, curious 'XX. on Owen I kind growth kind only was our out consider growth to curious growth it's employee any PEO weighing on are growth double-digit you worksite your conservatism more I appreciate I you you revenues factors But know to can more X% any color today. called or

answer strong We very, result very QX. a had Yes, the thanks. question. sales in Owen, bookings I'll

we're reaccelerate. that, seen and with happy we've very sales So the

we comments, are seeing prepared we I said in the continued clients. think as in growth

a have in we've look we we underlying bit be PEO per softer big challenge a facing some than would we're there's what been the control But saying back expected. value a part pays a we the if very, little proposition grow is bit to us for think seeing strong, to and to portfolio. little that for that we're think and is time, I our continue business very of growth

with Our next Jefferies. question Samana comes Samad from

the new you there maybe And strong the Roll complexity looks is versus How opportunity very question, payroll the 'XX? on around moving that included what How was in year. should much end about to in Congrats processing thought announcement the have for think markets. first international the it fiscal interesting forecast the into the about the of Maybe fiscal markets different I U.S.? like? we Maria, bookings international

Yes. Samad. Thanks, Fair I congratulations obviously the quarter the year. We're enough. proud over appreciate And on the pretty and here.

So with to out, an roll been excited market exciting here the international. it into for exciting. respect take to no across to the product Roll, pun U.S. intended it is us We're It's down in

of also mentioned, area X countries, put for and initial long is many about thinking space. the add is an role it's markets excited term into beyond initially across an of As it these we're that the it down-market we space, SMB countries. serve. goal that is opportunity because us us X kind the more incremental for We're really into to But which of

excited have international so Roll. the And our we overall as rollout dip continued it into to space of

factoring of bookings, into not the really. overall it terms In

but the thinking the seek being it various offer I the to have as that, that shame business. will the bring countries little each as us, who to for about us terms And remarks. being international. it it But complex, states and I mentioned tax goes to that one you, as it's launch about them. places. Last of international -- of legal I'd or in into provides. put makes the long-term government your U.S. it you do is addressable tell And get [ lot and happens surprised Many building that be We market the that's in you To what There's the I ultimately of of of about think if in countries. point, a prepared been new if the full that the entities, the as complexity ] there's spoke these by complexity to bit dent. bookings, the from the the final we've authority decades think an everything complexity business will, we're into business that's and to expand you tax value of our for last in for attorneys, our that really here We by country country. to often complexity, are year year couple ecosystem. the in a least, we Samad, over full international not of many how mile, a think these kind that's time and

dropping So works. again, of than it and it's a to the whether for things There's that around more state lodgements, ecosystem tax that lot off software border said lot be a at country it's a hoping nature. authorities, it,

of So we footprint built footprint excited our put Roll to and take into products in expand advantage that as the we've internationally.

maybe could maybe into expectations relative fourth Very forward from bookings for follow-up was strength base help you upside where just start helpful own dimensionalize maybe you guess upside company's that at FY fiscal you're helpful. a 'XX? Don. outlook? then specific -- it drove you quick the the I several you what factors. the what carrying be saw the And 'XX quarter in I And if broad the of that gave cited out to us would and called you the know bookings

question. a here, for and thanks to for I'll certainly it Samad, the But I board. Maria think strength the I'll the across start bookings. over saw turn Yes, we

the again, our international called in remarks, once prepared think we business. -- and out business the I our tax

the quite So were down strong they strong. all also that were very ones was strong market and the amongst

came are pipelines a cetera. et and times were about fourth contribution you've pleased very was Things and across some the on before it quarter, So for the we had about the talked quarter. We questions how to very, together get from with time in result. in and healthy signatures whatnot, the board final really the fourth deals,

have have of with tenure. execution, healthy have the was into tell are a position all speaking, the on that you, only that bunch businesses my would be, -- with that to That's our watched to pipelines I and strong a I generally outperforming quarters reflect we I've growing right. quarter few is with are it's entire the carried this a deck tell that those that have that's about. execution, it was would businesses sales incredible What execution. is what outperforming. organization of a to broad-based service, kind an by What all across all implementation you hands really stepped I across that are being sales add when you perhaps strength I to on staffing I attribute comment and you

question Our comes Bergin TD with next Bryan from Cowen.

I on bookings wanted here. to up U.S. follow

cited areas and several mid-market, strength, international. you So of compliance

you can And development that the think performance versus about comment Maybe what's Do contributing heard to the driving rising that and On HCM you I mid-market initiatives just in kind Next specifically, going product to the you environment? talk talk year fiscal performance? about on more of think is improved bookings. Gen the current that? drive driving competitive better-than-expected that's then tide you

that resonance better we've of I'll so as some you of market. It's it and and bit been terms value That's of in know, HRO to our strength the The expected. the we've comment both. seen on those than quite inclusive in that offerings, mid-market in Bryan, quite proposition a for bit time. speaking a been coming solid

which have and the So have. is that in adds to strength mid-market, we we offers the I flavors that think overall various that the

other the business. that think that tremendous I investments is made we've into

coming Payroll momentum are the is and the force that excited in seeing Next Generation there. just engine that we're kind our and have wins sales So of about that the we do pretty

in things new speaking the NPS, new into think and you other perspective, investment many on all the amount been cylinders. service definitely specifically retention product when think on to. And as side, well case. it so Now is with the the other helps the as will, on if I other the a are firing that's out we've done call and platform that the exactly the I've business I Workforce is the mid-market, of UX we've and referencing the made of the that innovation investments And business bookings

record have NPS mid-market. and mid-market, we across results our have We retention in the near-record

exactly of that entire the space. definitely So to everything the mentioned I the sellers a just question Next market. Stepping reference that's about working on We've we've feeds I our make that to scaling fuels And go year. about in HCM, what implementation, get that business. to a really, proud that what really talked in over for around this we've done lot execution ability and is last Gen excited that. did into quarters And the to been and

So were shortened implementation, that saw lot also we the our backlog. we of onboard that to backlog. of to able and additions a time clients had we the We've on

quarter in the as we in quarter momentum be we the will what larger step Next we contributor we saw us So but fourth for saw excited 'XX, in were as new pleased the and sales platform. year with HCM fourth Gen of about Next a that believe to bookings we into heading Generation upcoming And in HCM momentum the in. than the really it We're that 'XX. was such,

in fiscal where you're fiscal comment Understood. can pricing, 'XX? assuming 'XX standpoint on in on Okay. growth a just ES in that you And then ended pricing and up from what

Yes.

So increase price retention. we happy and with our were

we talked greedy. want as we're So many make to we've to times, not sure getting that

scores And about price a XXX-basis or get despite did retention seeing we the the NPS points price of So have in those frankly, And that we in healthy NPS scores. decline year. stayed increase. expense quite did without of the

increases 'XX. as very landed happy with throughout transpired we're So that land well, and price as they how well, much have can

our our price the that did take watch that make We sure basis about that and stays be sure, not price in place, the clients proposition going FY and we think 'XX. to of do But we'll XX For once increases to have going closely average again. historical basis to again, we'll 'XX, XXX not underlying point be value extent the but for to for we're do expect certainly some in we points. above range. We're in

comes question next Our from Tien-Tsin with Huang JPMorgan.

great I'm thinking bookings here, conversion. around the the With just

your maybe implementation clients implement. change on on based similarly, any desire their just to there HCM, You curious more just and uncertainty? upgrade if pitch I'd you've And of I'm hear seen point to the love Gen a cycle. from from comments in given around little Next some at bit macro here now the appetite cycles. What's mentioned your then the this to prospects the

questions, just both right think I'm I them confirm, So the to I way. of want your hearing

a kind environment. speak both demand it? about Is of the of to they general think way that the think to around sentiment I kind good

Yes.

getting by In macro decisions delayed current what's I suppose, appetite the in terms to, of and/or environment. the HCM

an if you it general the I've And Demand couple demand, so last and the I comment additional the wanted. broad-based across demand business. of that to the that and over I follow-up very strong, is But question to about on didn't quarters. think and I'll bit environment feel cover a quite spoken with free what remains way

And about still you think strength have the down formations. of if small market, business you the so

the You of have down been happening the continue such that's clients solution market. inclusive that that we'll complexity talked HCM offers the needing place little definitely our there we space, terms to overall for And of the and around warranted The that exists around strength that you outsourcing to hiring in lean a we've about mid-market, the our market. have That's that's in as the that offerings. we HR again as of by have demand. demand as there bit in winning, decisions make a in in earlier right? So

mid-market. so kind And the that's of

MNC and with is even pre-pandemic approval, And which decision signers, I to main demand it watch that cycles, is you you're really space, question, reason enterprise which perhaps of the to seeing, to relates back things the getting perhaps -- we we as it about as the delays. is aware, of what your to are the really is those that have an continue is So would And additional area levels. nature. say, places that consistent that we've additional, are been what space levels

elongation So did back pre-pandemic. shorten seeing isn't deal the cycles additional pandemic, that the it historical elongated But and beyond during they averages. we're something

this to to has time area in way. during And so a space that far. But an that to of our seeing as it business, decisions enterprise changed make appetite it buying the we continue both or area is just We're is in though, thus well point, client's demand the not is the at implementation cycle your international broad-based as kind we if an see monitor. watch it decisions consistently in to

Okay. No, that's great.

You answered asked than question. the better I it

a just lot -- the the I go-to-market that makes investments the Just a as and follow-up, sense. on heard sales quick about

R&D growth R&D. had. upcoming might year how Just growth I of about bets placing versus here your where also, 'XX? in how be different? be the in terms the And different on That's composition How fiscal you're all might

Yes.

guess the over good lot we've about I we that number this be anticipate, a -- get we're Those would the time of we'll are a We continue underway. question we've think projects, that the number so would past spend call, progress. projects a all you have investments and a that with a make we I'll I specific of product won't projects for number described it's -- that later of well direction to quarters, but question of AI with on quarters. that shared get generally, in Gen talking topical. But continuing given past our place over

The the ability Europe investments has by times, take and technology that's And in developments to markets increased. nature. of of to make in good to in we've how have delivery. only to that, role is that part global touched opposed strategy way, as an development that in nature continue take We broader of that that they're to is on our many and local these some sure example

great continuation new, we the projects So underway. the a have nothing and incredibly of work just great

comes question next from Mark Our with Baird. Marcon

went Let from impactful you then initiatives the and add particularly subsections, going are most a do strategic to near-term my the through on bookings. congratulations, X perspective? be various the ones one key of the you all initiatives, question. And your think which Maria, new me strong specific

Within mid-market, the the And only elaborate on Gen deploying a you was I engine. you not talked about wondering if payroll, you could mentioned little but that. also bit time Next

thank appreciate you, I Sure. And Mark. congratulations. the

remarks. will that to each a right? prepared they yield I So to about business, priorities during bit the pillar all I that -- strategic and the as don't broadly I was because have they relates I I ADP, apply expect kind than impact faster know to of of another it depend I across a think speaking, am pick very as a one favorite to outlined or necessarily expecting excited

to results, the And an have which competitive differently, but the we of I there. we've an internationally, things, mid-market that product work have in our some some of see mentioned done short-term of we so impact, ability momentum like and earlier, making, when the impact a of taking I some with example, differentiation and that think Generation Next a advantages we're where about continuing as we the engine, to product Roll whether the build investments win the on Payroll it's in be won't the

can I think impact area that short an that's tremendous have order. in

efficient. which lot things think nature. But for likes pretty that opportunities about whether us is think reviews, the to And other a to I things will broadly around term. it AI. point solving opportunity of long these it pillar We've when job term your that, what there second kind in across for it of real also clients come our I descriptions, pillars, is first, more to like Gen he I that's product about become that talked applying it's versus Don the that, and of the leads AI performance mentioned that's generative is, short tremendous, think whether me did

that the term clients. in to our in impact across as long that generative well the opportunity there's our think really I as of make applying short expertise we provide AI term will terms

across our associates of deploy will have to and businesses with already our ability deployed I assist if agent a the be client copilot leads to efficient. in a clients where if going staying will. more that as short-term clients else almost happy to longer we're more tools clients, clients for lead further make engage to nothing as to again, think -- into when That's some us engage easier you And results various our that it so helping think it about with wheel of fiscal and such to sales know yield our agents or 'XX, satisfaction. we our the we And

there across certainly, impact excited And global we to than opportunities So are I'm bit sooner quite a all long I the have the strategic spoke equally all But piece. of them. of about the some term. yes, priorities think about us

time those generation next about with our the of backbone Next technology. X engine, the that Generation in time is being tandem on terms things and same Payroll mid-market. are our together based developed really In sitting It payroll engine. And in of is a

excited think throughout also Generation impact And take in more and the of the take business things broadly if feathered And those to we're course mid-market you continue very that more broadly bookings Next get the we win I our Payroll of mid-market 'XX. so the will both engine of crossed. will, new to as across into rates, the our

the during year. up then, then probably over that the margin driver course and full the feather about you how think first much of mentioned of expectations mentioned be you bit the And quarter, then there? going And How first the the year. quarter? lower pacing quarter-to-quarter? And And lower improvement Don, we what's should the it's the a to in for little the

in we're for the not thanks drivers. looking big couple -- Yes, the a first The the a Mark, question. of but at just quarter, change

incremental big a our quarter investment But be big fund some quarter cost do borrowing it's interest laddered in us to first other clear. client headcount, cetera. have and in the strategy. is the in driver Just et One, for we

first. So that's get opposed we and to to sorry, but quarters the course -- margin build for year, the overall that more fourth first as expected, we of a the for will pressure the And out the improvement the bit put the margin of going of little the will to over X on continue quarter. the

Simuni Our next Eugene with from question comes MoffettNathanson.

come PEO to a to for want back second. the I

you FY hear now sales. would are Can going in PEO acceleration on that still and completely what So in caused the into of helped the great color about And you guys generate some to hear have actions in the of you provide bit what work reacceleration Maria, and generate into fourth you're levers the know those 'XX? is I about to a kind bookings? quarter progress in it those strong I or in this more talked initiatives year. will taken PEO pulled love bookings continue the past, to pulling new bookings?

the Sure, Eugene. fourth quarter incredibly pleased the bookings, again, the and results reacceleration. PEO we're with in

did also reacceleration the quarter. see the We third in

in the So overall value together the term, I suggested. proposition short overall on execute. of really long a back the half And and about the not are a you trends was and term, how not pin as trends to that exactly leads came it of of that management demand team, because just the fits. as It lot many excited as business in, warrants. I'm remain of in was of in kind at as for that focus request for so number PEO demand the of PEO the it's terms the looking simple we hard in bullish the you to are as It's potential proposals because And and there PEO, know, down client every coming demand variables.

outside of to of it kind to also spot a hard various variability the it's difficult there's normal demand which relates of the makes level kind to bookings pin of the So down as quarter-to-quarter, the PEO environment. of specificity trends in it overall And various trends. kind little belief demand in

has calendar happen. we with a in do to of the that year-end, sure the was of renewals focused in remain amount across as and drive all do to to We the leadership make has But growth with of a bookings that nonetheless, team the strong still there 'XX. very of tremendous Some focus continue that to some remains. in when PEO

Got it.

my Okay. then probably Don. follow-up, And for for

a about little You costs margin bit. talked

year goal. it this year. math, year, revenue like margin your do you the adjusted kind tailwind next another next you're year not than to but will growth you if And year obviously, as of much for have some had in [indiscernible] OpEx of to this looks of did going your slower to hit expect grow need it you you So improvement as robust

bit hoping next of So areas as maybe if little where you or are of can macro conditions year will expect temper a just not you talk good the what pull spend be. as to especially kind them we maybe back, are

Yes.

the So question. thanks for

change. what won't by start me Let

and with make the cetera. But we for sure year, we to did make those pretty generating in strong get the areas revenue to we'll continue that have deals run implementation et of that So last make change for it invest and effectively substantial the business key have we in the on is that us, up people can to sure that we'll what bookings, sure and running ground the we won't did in to growth expenses, those substantial about much of areas. talking in came have up see expect as going in the in service, the implementation, the see out do growth couple with to we believe -- of that, growth sales, still expenses pandemic et last in years we're we as cetera. can't some pandemic, coming growth, but not we're over while I to And we continue

the on one be would not with growth that of and hit year. expense that the going make OpEx, see So you to we that OpEx in saw that is areas going respect we're to in prior sure the to

was to the time yield curve of is that contributor, course, other the spoke than you I it The to contribute, all. more continue think I last favorable will

in the get will to to it's But that We year. going be we time, at 'XX. the fund contribution client same did not extent interest from next

with margins we higher. had But also same tailwind -- once help going to again, in tailwinds that the that's 'XX. not driving So

I our year. next the think are margins main that are help items going those into to us improve going

Research. Wolfe with Wurtzel Scott from comes question next Our

relatively year, Maybe, out first it sort any can you that cadence the of know should and but maybe throughout said revenue there? differences growth. between about there's stable PEO if be I you Don, wondering we on think should of parse the ES if

Yes.

bookings consistent going result backlog that very, of big we going So to year strong I that as pretty that the -- be revenue fourth very be growth have revenue start result. think to quarter growth we a now as is is throughout

it's we slower a going PEO, in burn So Likewise as of have strong consistency with to a be QX. will there. did we see bit sales

slightly business. PEO the in growth lower talk control also about pays So per we did

So really that -- don't to but they're I be different. think going

to the company, I the business growth results different between close you overall for be consolidate substantially going units. and about the when if think they're not pretty you the think

is the different Yes, a slightly there for difference. cadence not huge X, Scott, a it's

over an expect do course the we PEO, acceleration year. For of the

lead get per on expecting slowing gradually some the deceleration that So we expecting and assuming contribution from ES, the per and we're improvements over the PEO assuming client gradually decelerate from overcoming from pays the funds in retention, of fade to starts growth. And bookings an control control our we're course revenue interest should accelerating the contribution to pays year.

they with stable So ramps, offset us nets different-looking what to up you and overall. end that's growth but X a very revenue

there, needed investment your incremental year? put maybe essentially more Gen you is topic, AI to then That's excited just all helpful. there. that about Gen be for have of a investment a of Or And back plans sort follow-up investment on maybe some going just on focus it. a to burner projects had Got very But to kind little of lot the Obviously, the the to other it. AI? on wondering back there's to magnitude the

yes. and Yes

differently, in news X just months. good said the our process through so is plan And last strategic the we went

priority we our lined so in investments our of up. of had sequence investments all and all incremental And

perhaps where replaced projects lens that thinking some way very it. we a and to we enhanced, some get of on get a about AI, projects marry Gen different may look As new and where by clear may have

to a that And kind there we be so through in there will opportunities investments candidly go speaking, this we're some new things going through and way. and do a of these the will juncture these be bets of lot thinking of at other incremental investment, repurposed

both. So is the answer

Peter Christiansen Our Citi. from with next comes question

I I'll algorithm context, put in the add contributor next to X you expected an important congratulations ratio. on spend, if on investment was do parameters years? you Nice And could growth to this -- you if M&A some I the here. trends. X to effort wondering just the scaling Maria, as international see question guess, over also a the there?

Sure.

You started international. a question with on

just it general? rest question is of the about international? is So your Or in

international. Yes,

international. About Yes.

street, international it, our I have we the, the mile that on making been on have to call we in-country investments. of about decisions lot been, the support feet the the final a talked infrastructure over So years, business.

some do And markets. into of go each go we so into of markets those and inclusive new ways we organic that will That's We continue year. new are that. to

those it, Some some partners at purchasing, if point, actually will, call are acquiring. ultimately end or of we up you that

lot global really the we I so warranted we've the pulled And markets us And the When that speed. answer into X into times kind years. in decision is about this for byproduct the organic times, heading both the X they're to went clients a into the make business ways. continue leverage how countries think such, such, and where XX about choosing we are our inorganic. And will we're of markets. ways criteria pay lot is And it's decision has or we about that on the for built both both get last And of us clients to again, us, do we organic That's incremental to it with year a inorganic will that of get employees how as certain there. view, of that to lot with there, and markets. as over speed. A think to

long So time, -- know a you Don, anything. to don't you I add business ran know if very I for want don't our international

to Italian also software a very budgeting in acquired we've done that's of very We interesting -- the what number been but an doing, SecureX bought Bangalore exciting We in India. South payroll a time-and-attendance partner tool did Africa, and number last that product I [indiscernible] and years the good called been have company we just Yes, in a budget Italian tuck-ins, X They've ones is have out over year. mid-market has maybe we market. prominent our acquisitions. of Peter, the add, mostly think over acquired of we last

the So Southeast available Middle -- East. most that and is product Asia India, of and in

what think looking do we that's footprint, exciting an to I So to to us. on doing, demonstration at be we we've focused it for been that grow we've continues make space continue and sure and a of been think

see? schedule investment the slide color. typically Don, maturation as levels But that should with just super great helpful. turnover, And correlate of the That's balance we on a client about that investments, seasonal we last follow-up, think fund as intra-year

Yes.

mature, and reinvested think current average to rates, a a years, investments and up loan the average to look of and the little X%. our long in across The do much we some our couple overnight, see expect over the portfolios come of shortened and year. at course see about over at or of you at look mix you composition to on of the change to to We at duration investments pretty where going So reinvesting you're yields, portfolio pretty return we're can I last much reinvestment think end bit at extended those extended we those expect going to has our overnights see those are don't schedule the at the schedules, as The higher a up. in then go maturity but the the huge that the although the numbers being conclusion provided the look reinvested are X%. investments come

the helpful. I like next any strategy, to there duration be Just here, sense about -- one quarters one. the but are effort there shortened? is guess, How for of Fed is Just the quick perhaps would duration we now couple think of stabilized, should kind that an extend

been At and believe be times, We've longer the back had not come ever and answer the over today. had will the question Yes. an We successful see certainly few that very we've yield there curve the in this time, with to short that in we beneficial is cost and strategy XX same do we've had is will everything normalize strategy place us opportunity that years. the a the having term. for the we've last

expect change shouldn't in any investment our significant you So strategy.

Morgan Our comes James Stanley. with question next from Faucette

that retention. out. play to around on for didn't bit. little more of is be you're Last obviously year reason But your speak I even? maybe to you're seeing -- you've called I to how minus points could But a start on embedded And a conservatism XX drivers back than you initial And kind of outlook conservative bit as to it wanted go minus conservative there? degradation. year, to I'm with more XX starting quickly year, XX to the retention you this minus a little XX. know what XX are touched really basis much that a last minus were hoping

a it's it. observation, fair -- Appreciate fair Yes, James.

there? the I you're to think about knew wish is thought all -- nail much we're how the of I conservatism into that's XX, the question So XX, with the and this year minus fiscal stepped guide -- with by 'XX on the I guiding in right? stepping you is we which say or head, And cylinders. -- asking, minus we the way, answer, I'll with, we things very to I'll We're XX happy and firing on we're XX hope are. end hit into a all where to start

businesses record record We have results, that results, many retention have good. is and NS everything

a we way will, back specifically step the we actually are had We pays fourth into about quarter to that the modeling in year, And of you tempering, what The normalization little if results in incredible the led of market is market. would in you we've retention. Part the see the down per bounce thinking potential down byproduct so the see that that that we we see what we way really as how bit. a in the the half, seeing did macroeconomic been the we're was that control. saw

So it expected. down was came it we stronger in even than year-on-year, while

which targets our we that Investor believe prudent we to we gave anticipate why Day do is the need may in back, to so our that of of back targets align retention that And give it medium-term was we XXXX. some to

the outlook, to still lows. I how wish terms that's about in why record at what question guiding much GDP, are the whether I knew economic unemployment we guiding your we're really of conservatism, answer So to is is

We rates XXs. that seen unemployment haven't the since low

in guess level, retention. And as some on really back economy build of and the as yours so we yielding what's tempering half, our is but in some guide that that's at the good the did

makes appreciate that want That's Maria. really a lot M&A. turn of quickly also and to I I sense. to color, helpful

your some kind you the of part strategic geography in it be in What mentioned in I mentioned overall of of of it You least targeting seeing initiatives. or product as valuation would also, terms at terms levels? of what prepared remarks, you And capabilities? things are

James. Yes,

what want top to So we what it's product and that exceeds that functionality of make already that really and more that we some things we we're currently kicking something on well in more gives or us there's do acquire but have. around, in targeting, the capability that anything of talking additional stacking have, on we're capability, of we core about, not terms sure either we're so fits always what course,

of area, we thirdly, a sure in can these what very other that sell are our to recurring things already that they And that so things adjacencies these sure is is make do of adjacencies The strong and to natural that fit course, we making then model. well. we things course, run do

sell can and we the that model today sell everything and anticipation them and what we expect revenue operate way So we from them to good sell else get we buy.

think we I things So the think those about. are

if these of market. We about Remembering, a the that number few get valuation opportunities very likely outset don't the days. front But little to at around activity, course, certainly few the lots a of I to we have overall a hearing the think, get to the down on dearth coming we're we're the in and in very many talking of you they premium bit to press, space conversation. everybody actually do point of at actually looking that valuations something, going we conversations think the even will, M&A conversations I a we're we a of lot But get cases. to paying given have. stated if very, the make course, what get of get in the to right view in have buy still price. of valuations very, of sure trying acquisitions about whatnot. And is I a of we're conditions these that to

So to I don't focused things fit have would have pay into we would are and we think we I can say ADP. general on a view. what But how

Mehta last from Our question comes Kartik Research. Northcoast with

being But you breather and has seems the maybe for may of a taking and talked and be PEO of now lot your picked that product? customers of pointing the about expensive up. wondering, demand little in bit the to I'm any the more obviously you've a really Maria up are the seeing a PEO because that economy uncertainty sign Don,

PEO The has a tremendous value proposition.

as most all-weather do to our ability company. the the of to I in I an pretty think And refer we businesses durable proposition of always ADP a flex is quickly. downturn that lot a say PEO. to has all-weather would that with the value

PEO So they think a that about because the clients growing, enjoy quick go-to-market. if are you it's

has The a On ownership of total to will, if cost that clients as through PEO clear clear. a again, investment, trying the very are place that's return serves potentially work you economic as has headwinds. a very on downside,

I that so not to think say would works impacted downturn, not it's pivot both. that business by that business to proposition of I and a a believe has warranted. a that in happened. but don't suggest able that as sales value I is What force, our kind it's it's narrative we're And that

would clients purchase to as macroeconomic to my that's the the And no. hesitant view of comprehensive challenges. our the something question, such so this point, So PEO because at be answer

substantiated in I the the that's the PEO that we think results by record quarter. in bookings had

bookings in strength third We also in the saw that quarter.

so business is and proposition that the life offer for economic the the I can business been value -- And should for a pretty ever quickly wins should come that demand that expecting think firm. that a think pivot to long. It's it's holding I So we've remains.

through. Don, follow-up. a about and just pays talked retention retention, the then per obviously control as year goes you and maybe And moderating

For end anticipating Or pays get would you've built guidance? to year? the how that that's go of per the just and could the control, that, you you negative, potentially flat by that to anticipate are

bit historical think it's neighborhood We're anticipating go to X%, to than do, not go the No. as which average. somewhere X% less to going We certainly though, negative. is this little a our

However, understands, I just want healthily. exiting to make sure year that we're the pretty everybody

X with a expect quarters. and going cetera. the a bit forecasts start, to off decline we're again, good do can that aligning once figure we of pretty see we're So et the we over to unemployment best to ourselves a we're next but X, we And

we're this is you're decelerating pays the exiting from to specifically kind effectively 'XX, per something then about range of control X% asking if fiscal flatter. where Kartik,

you. for Thank Maria portion hand today. question-and-answer closing our concludes the Black over to am program This to for I remarks. pleased

you, you, and everyone, thank Thank today. for joining

entire the 'XX, team, the Don heard, you've quarter fiscal and As incredibly with pleased specifically the fourth I, we're and leadership finish.

started, magical which come create want end performance. again to unbelievable we thank take of the all what to once that is I associates kind thing where It's watch together I'll this I it to and deliver So just the opportunity delivered. an

thank certainly stakeholders, celebrate support. I them. of appreciate of gratitude excited today, who listen each every to 'XX. including all And I fiscal my the and also for all you want so one and We're of the

that. So cheers to

participation. Thank the program, day. you disconnect. you for a concludes may have and Everyone, your This great now