Automatic Data Processing (ADP) 31 Jan 242024 Q2 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 Second Quarter Fiscal 2024 Earnings Call. I would like to inform you that this conference is being recorded.

After the prepared remarks, we will conduct a question-and-answer session. Ms. [indiscernible] given be that at will time. Sectors now will turn the Mr. to over conference I President, Relations. San, Investor Daniel Vice Please go ahead.

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

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

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

an and we on new record quarter for progress new keeping are a our This reaching with priorities. Services second and review everyone, Danny, growth. QX outlook. full and business of growth thank results, quarter's volume year track the Thank update on you, including revenue begin the reported for Employer the morning, highlights across us for joining our you, strong us. we bookings X% delivered quarter EPS providing before in second strategic We X% I'll financial adjusted making bookings solid a

healthy in the quarter. forward robust across strong a season international mid-market important and in business ahead. growth Employer end of we With our the our and was look pipeline to Services Growth quarter, healthy the second HCM the was steady small and demand new retention at also business. portfolio, experienced we business especially selling in

compared our expectations as prior declined business we and satisfaction client healthy levels. it benefit the high overall once slightly environment year, very Although to from we to a our from continue again exceeded

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all to over I'm highest Promoter our proud and Don. our overall it that quarter. do ever clients. to turn Score And in helped Net for level ADP share that you its efforts drive I'll again now Thank second the for their to for you

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As record continue quarter business new grow bookings Maria second ES shared, resulting volume. we a to in bookings our

this portfolio pipelines, on we to our the international growth steady business and business for outsized feel HCM business environment track healthy X% small And for and outlook growth with Our year. a demand provided bookings contributions new quarter. X%

in As expectations. the declined versus mentioned slightly exceeded again, year, but earlier, our our ES QX prior retention

with offset a to average half which per is retention, expectations, average first which increased revenue interest line year. our more outlook QX are and XX client slightly. we now X% our yield. last points for to increasing full with expectations in year we basis was a control our in QX outperformance, retention anticipate by full in And than balance, an client than our are slight full discussed X% our in the year maintaining XX ES in XX was of quarter, decline X% We our pays growth retention basis line forecast. our increase Given in we funds better and in point decline our prior our funds as outlook growth

However, change revising funds outlook year rates update. reflect prevailing full we are the interest in our to our lower since client last interest

of $XXX client X%. fiscal midpoint. million we revenue a from of fiscal a at ES total, $XXX funds $XXX of $XX forecast our In representing change 'XX revenue net X% client interest to about was 'XX expect strategy now to $XXX expect investment million, funds reduction of and our there the We to million no impact to million, growth extended million

and basis outlook as of reflecting contribution QX. funds but AI-related tweaking end driven our client revenue margin ES XXX Our ES in points increase the as impact and leverage a from increased prior interest fiscal margin funds are we interest slight 'XX anticipate range. a margin the growth, now operating forecast by spend, lower well our of Gen both reduced client revenue in expected

in PEO, stabilization metrics in by see revenue per signs our employees are average expectation, pays in quarter. growth, These control Moving line encouraged growth. were with we X% growth on to of X% the to our [ driven worksite had and the second PEO we in ]

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changes to of increase an to XX expect our margin points X the to segment increase basis XX outlook we to adjusted EBIT XX by points. for prior XX versus With margin, now our basis

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Please lot be time aware of questions. question the ask Please with one a brief follow-up. for of

Mark our take Marcon will Robert first We Baird. W. with question from

benefit from that reviewers. CPA reacting. if should we would you the of third-party the think partnerships bit And about you've -- talk unfolding a was investment you some all accolades you partners on you've congratulations about And partnerships. end up trust. little the like end and a obviously, got initiatives. and wondering setting gotten would up own you think there and your some they'll with talk be some of do can bit think specifically, the and of out that one what How up how do little your bank Can third-party about reactions the administration I'm partnerships stood that how

well the across board momentum the really excited appreciate and our your I to but appreciate comment recognition, initiatives. on all a our It across also Services. question, demonstration remarks, our -- certainly the the we Thank see prepared mentioned all Trust of Happy Mark. the wishes recognition I Retirement of scale. you, on to is during of continued

what what banks, to think it ecosystem it our mentioned, I that to clients, you means CPAs. so the And about means when

trust And of are plan. positive. a any core think component services I incredibly it's all XXX(k)

in of capable our we Given a that that our what retirement stand-alone the services actually trust of of able is of known business, size handling of of pool of offer is will, are as difficult, services third-party retirement shrinkingly are the if just scale what's offering our size trustees, you a you to if business number that and more the found providers to size. becoming terms will,

us clients, HCM our leverage to on of really par It the our to the advantage this in So terms to a We some trustees. we great value against that, continue believe competitors industry services. that competitive made is decision of leaders a in-house our ecosystem. launch services with the puts the third-party in that trust and financial other to

trust I us, we can business have, which the to And and that taking our yields the is, is it's that a we control costs. for we really by Ultimately, clients, said, for and to So business services over really the banks service. better big financial how have our price retirement commitment as a better think CPAs a matter advisers. the that better that implication

also have ecosystem of of is maintain the those a all ability is big data all which, We integrity inside know, component and data who ADP's as the things. to you in of ADP of terms

a So nutshell Mark. services that's kind trust of the in retirement

decline of coming lower just what been of of the it then in scores? extent terms is anticipating as bankruptcies you seeing of was levels improvement due that ES To you've to levels. are of an is which anticipation that to terms level your lower just record noticeable of opposed that off service And client in retention, the basically a

So been than better retention in we well, expected. we the that mentioned incredibly And is has remarks, retention right? year-to-date definitely going

healthy And so I are fundamentally things right think now. really

mind half thing coming while are, do perhaps I highs of are a out from some material being several more last impact. anticipate in to to we've keep as kind you we normalized pressure And outlook, business we're that from we that record the years. down a that mentioned, of fiscal trends, 'XX the the of about think in close One over seen off is the we some back a having in we believe of bankruptcies to back perspective, market of specifically as also

prudent running to it's we we're have we we it for the to attention given date record levels, ensure seen the believe at we it believe want some have that prudent such plan that back pressure. but to of it's fact haven't certainly We to in cognizant half that

like just in some half. any have is And always services some normal we obviously, year, and back so retention variability in noisy, Mark, the

like I'd you, there's like that to Just think opportunity there.

think of we're I that's kind time thinking half. to about the answer us give the how but back will only that,

Stanley. Faucette Morgan comes Our James question next from with

all quickly Appreciate this on morning. Great. to the detail touch wanted just I PEO.

You like in out changed. the business, called for but strong looks was a it outlook acceleration revenues

in how seem and concentration the that, mentioned is much just a little that I'm soft, issue professional to employment timing but in services You still at technology, bit trying may of capture versus have you the which have least reports.

question. sectors, Yes, been stabilization James. We've per pace those sectors. happy Thanks services in to for that financial in the technology the control see and

So we from of there, quarter. prior in noise still certainly although little it a what the bit saw stabilized there's

positive. that's So

Maria happy at do already results, we sales I think bookings. for good. as our our that very were looked bookings PEO, with the mentioned we that very

for of the I and think pace bookings. put control in the as improvement kind we improvement the in our together, that

been pointing of to reacceleration that be quarters -- the going get the we've components, going trying those is but that in what's variables think really to those really get last that couple of help going. I reacceleration over impact to us just to towards we're X heading the

James pace not -- prior upside to it's stabilizing, although just control, any sort for versus providing clarify, it's our the forecast. of

revenue, year bookings bookings providing material It still a drag. an well. Those a netting are change in-line to to understand. are With to of the bit is all going which takes in of control terms really gradual outlook. out X current paper drive sort So quite sequential you

about seems -- wondering this focus how we what what then and -- quickly But call. incremental et on you're there there's customer about return and on of on bit operations, how And kind frame? like the And little satisfaction should investment increased a certainly It it. a a of Got of there's think over big investment and maybe time more that where qualitatively cetera? anticipating kinds internal paybacks, or AI.

Yes.

again you how investments Maybe a the about little bit that can we're the So all you and I'll tell side give we're the on start reasons so making. excited about thinking I'm AI that Don return on about it.

simplistic AI X which we're product how first its everyone about really the about remind thinking I is to of just think innovation. in in So buckets, it most way, and

AI into innovation all generative our cycle. of putting So

to So of we're So by mentioned products, that and speaks thinking the our we're of remarks. And drive market meaningful development functionality that call the morning, and payroll from and that's product later press like and like really press to actually features I what in issuing is design in into smart everything a and around way. the some this easy, of about release how the product launches within things philosophy prepared things assist, principles this through innovation and to way, our product a it right? making assist things human some release cycles goes ADP innovation, our

see, is now We impact that. really first across on of investments it And kind our relates bucket. seeing and So meaningful experience the there. product ADP more we're as deployed we're product the you'll broadly as set, to do significant have assist client making

The second to really jobs make to same our efficiency efficient we're tools and and this service efficiency, same give I and giving more giving associates. is bucket all and those easier the effective is clients what and about things their looking call our to that

more have an than assist. say pleased overall. we tools agent assist I'm in to that AI the are engaging agent today doubled of associates so perspective, And from number we've that

call from things just big on our let of around associates a is that talking I'll what you to by return. would probably give agent about while shaping what are or of is calls offer you minute up summarization. service also seen comment we millions and a take we're have here Don But single to thousands we doing kind that that have X I the times summarization. we of every aiding And flavor we're we're like Again, and piece of in we're getting minutes anchored a of and the associates, Specifically, feedback things assist call there year. is and investments millions minuscule,

clients. and minute a over of to lean right? continue pretty and associates we relates excited really into us to about engage getting we're our a from efficiency an ability so there and as our what optimistic it time, a here So service And for opportunity all in their effective means with minute more incremental to that

way, on But important then And the topic. go-to-market but all about how least, least, and but this the AI motions. and last not very, day our by last on not in on on could thinking I we're is go very generative

so have, of years, for sales modernization. the the we And been tip at of spear

we tools where modern that way, the things We manually old have myself motions, planning, personal sales best-in-class just looks of items distribution We and of us. used as best-in-class and decades seeing and always a by I to no vendors partnerships to which there. different the is force, level, call with been for and partners do are pre-call have that for that relates sellers lines us for at way leading like as this to the Things big great go-to-market our our surface. these leveraging what a have it generative prospecting many scrapping AI, -- we're started we impact the such are are a summerization it along broad already through we've X of like our set have and

just of really kind in, all all So it wrap again, excited, up.

motion. our it's go-to-market about service efficiency and product, think I

active investments. We are making

investments those working things shifted are that we've in transformation. of already digital that we Some were on

Some investments. of it is incremental

you incremental of and over I'll thinking Don, the about And think on that, turn our return we're kind talk with how so if about it that. investments moreover I can to

Yes.

of AI Maria the I have areas us. just exciting for So has Jen will that some think outlined

investments they the our client talking that how help really associates more, how of say help at some AI. this change what But time, about And experience, will one how in I Gen they cetera. is would in we're us point some sell things modest better et

right from be cetera, in it's financial now, see in it's near to returns and really little time returns. but tools, those these term those start things, we'll going outcomes, those we down do somewhere the anticipate a certainly et while investing think a I outcomes for before we the to see But road.

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

is as Or selling normalized words, PEO? to is out called component compete becoming PEO. other of compete expenses in abate I to to higher question, the You in you more margin seller it expense expect expensive just in one levels in guys In cost a just this this more point? guess to headwinds PEO do sort related the the of period? time at

I as I as fundamentally and expenses to different half Yes. or -- -- give a unusual nothing sales There's from sales, think, we we sales there's could answer of just our the know, about market question. how higher internal. we the don't take think go certainly, see our to of really our in or selling get lot you

So how little higher we allocate some into will, sales units, you of a of higher if et bit generally translate that's selling housekeeping, expenses. internal but between cetera, business expenses

any So really not certainly to different we expenses. seeing market, in nothing how driving go that's landscape in the competitive those differences fundamental fundamentally

it. Got

international same Okay. required these needs, for -- In [indiscernible] Or markets that value the context there partnership on need also, the are like of sort And opportunity? international product guys follow-up itself, you sort one it then partnerships you international in more out as Ireland the the fully it's execute launches can the with you just the of guess, largely whether distinctive on comment is U.S.? Rural proposition build the announced to I guys in of and still to in products, me.

I'll Yes, the can and here second. Barry in start, add

like we'd you are people our in the though of to look know, the it's of you not roughly as as at if a XX% total, we pay international revenue as even revenue be, around it the and international. percentage where So world

we for the and U.S. different reason fundamentally in offers the -- that that have is So

things have like PEO. We

services, movement money have also services, We pretty distributed. tax much broadly

same the of value U.S. market. proposition offers of don't Some have outside those the

a Canvera in respect to as quite be they're time isn't bit, entities clients markets. have multiple the countries the a in think not services clients you like the social if their can all help today, large on, But And partner, and getting the of of be people U.S. world. goes have in around small the various those somebody managed may those who will So not the countries ] of countries. Baving other we a providers to large the spread across cetera. Perhaps to complexity speak around the about of as set available countries to And speak European Canvera difficulty of same. [ some to or thousands and little those thousands it prop in and that same. small world the payments with multinational opportunity et having thousands there, the security -- function value these we some the just those paying of without there a as up our treasury banking, then

payments us Someone very those facilitate cross-border compliant a in cetera. great Canvera a in for way, like act a ] -- partner [ to is et

positive very So that's us. I think for

do great some in just us continue partners we but see as a we mentioned, So have I to Canvera, as opportunity grow. for still to it international, like

right. suggesting have we with is That's think really, things I one is Don may, the the what opportunity I international. If of

outlined tremendous of context [ with broadly is there that when the put in international big so Don in the we just piece us the more a that. is And Canberra think of partnerships in a for as the ] you U.S., it have one opportunity business

international -- offer perspective, in an on we did have I What would call would on performance of well is specifically bookings. out a as heels the international. that retention. add I QX. also the solid record we by That's, That's as from way, in the QX What

customer and record have in international. We experience client

a we have offer the respect remarks is international recognition with of in I tremendous value proposition By offering cited have. is really we some our during how way, to about best-in-class the the So the think international. prepared I

as So that not mentioned, John satisfied. said, we're

we're that. more and I payroll competing piece partnerships think there's very our undoubtedly, well big But grow are performing of scale very, and offerings internationally. a to beyond opportunity

good Fantastic like ahead. sounds things it. Appreciate

international. you know mentioned just comment what, you Oh, because in let me role

just one I teaching market that we is we're a that the way really pilot that down running market the about which as getting are lot quickly, excited mention is and and we're international the are we very down So that. thought programs think after about role I'd international. us and

question comes from with Bank. Our Deutsche Bryan Keane next

know I the little Congrats were just a quantify I average the of tax as want balances. a results. about ask drop what's of the of more from deferral year? there go headwind on there expect? decline of payroll in a X%? balances Is part of Maybe And balances the down should we headwind expecting expect the we that Don, then similar maybe to for you the reason bit forward solid tax from can half a payroll for and this the deferral. back

behind call tax don't not -- deferral. We quarter-to-quarter. so deferral out going be to That the decline No, you behind that's the was definitely to us, right are I now payroll that's think there.

So X% the growth year. X% to we expecting throughout balanced of the are balance

very So positive. we that's think

interest whole those. X-year the XX rates CFI of big both spoke are fact a think program call the I out XX-year on though and about that last bps since down we is on just

Certainly, that's And and going perhaps the of year. year that's will it's year, control that pace we're back for still certainly we've in half are of I this And think growth. last the lower so than as very the of last as or roughly the wage control expected, balance we a quickly we've $XX in even did about they bit the per behaving it lower -- of the though be talked growth. about a as half year. in moderation so in that headwind, calling optimistic the Facebook was reason flow half the seen it back growth are certainly some little it is back was But than lower million down number not

So those full -- back influencers, to would and forward balance half. you major will, if go the the we be to the as

talked is to kind ES about. range the end lower part of that of you the moving of And of margins it. Got the

you talked think I rates about there.

on was lower range. the to from towards what you that end caused push lower X think margin maybe ago surprise you new the months the or margins end of where Just the rates the

you're right. Yes,

a the guiding us component to think of is our certainly I float sure. of range the for middle

that's guess to the try markets. component. don't So We a second

curves out to think that be. estimate we We use our what are to market returns turning going the are yield

the surprises land. overall and real we're forward then than we what's those in other to no and balances, the yield seeing happening taking that's applying and our in where So market, curves the

next Our question from Wolfe Research. comes Scott Wurtzel from

some side. the start that seen Maybe pretty be also from we've and into positive seen was selling sort competitors, through tracked wondering It But all maybe And helpful. off the would seems maybe far so on any you've season. pricing XQ? changes on go-to-market strategy we've then like how in that it trends of what bookings just to wanted XQ, in

we point. this Scott, at overall feel about good the demand environment

And companies are buy. things I HR are -- companies and hiring think a highlight that to their actually you. definitely companies of still I think in down to we this still to couple there hire, investing continuing market, saw they're well. continuing are as they're their morning I'd talent, in The investing people, are

been the tremendous that quarters. have second many, way, has well for really We results. many quarter business executing By incredibly

a are that's of services, a line also of the incredibly insurance to is And January. well things the Run, of market sight bit so think services XXst is doing but you it's that offering, of all it all down little the Run give our as to attached I retirement

And to visibility tiny do asked have looks to we quarter. the down of market. you would January a about What good. actually offer specifically into I bit third is trends you So the

business track in I the January. close to something think to in units XX,XXX alone month that of actually like we're onboard on

that's so size if will. the companies, of And you some

to incredible pretty down the market. execution the in it's see So

It's to shifted. the across questions We well very have solid shift a offer you [indiscernible] area for for long been I that is really very, well. time. would us What space mid-market. we're pipelines really It's market, executing From lot the a the competitive an incredibly did drop us for hasn't the second it think competitive the mid-market, we mid-market in It quarter. standpoint, around competitive a landscape. I the a has get well. of

We products. have best-in-class

with for from We based We it continue make and to retention. take our our our record this on based our this results NPS. clients engage results and know easy friction on clients, us. know to away

good had bookings in We the mid-market.

any the So mid-market. be getting for our clients solid is to certainly in not and the I think mid-market employers easier

more As on space, won't the I it to the then already, good much individuals normally, and in kind normal our cycles. a that that longer relates that area a this I heels touch QX covered those think the new I deal international in more is on enterprise think so space, QX. involved but an And have international, of has upmarket good I of it's on cycles

that close our paying things our but suggest half. you pipelines to relatively all it. certainly, would we're happening that ability in and So that I the bring we feel across kind space, the about solid of business attention are And that back to to

And follow-up just Don. for That's helpful. Great. a

for client float the Just on income short pretty your notable portfolio. outlook on noticed increase the of guidance, sort a

a give of on maybe could of you the those if year. the for the wondering geography sort little in just bit of So investments balance change on color

Yes.

for little clarify bit. you let maybe a So me that

to our strategy we were a day the really, we've haven't changed at that investment bit all. What tweaked were in done -- So in funds the borrowing way we we day we going and out. market is have little

what bit So a little early. market we're actually seeing the is you're entering

so need everything you will. market the We've borrowing a of spread on So to instead tap over scooter, if we day. we peak borrowing out that borrowing X, X the can simply in days

release, at think the up that -- that, on in that's if looking driver. gone in And average notice appendix you're the a has but the short the that on the fair number bit, that's I you'll sheet balances

our amounts tweak not strategy all. need in It's change at in funds we a have the it's market investment borrowing. when just we're actually larger in a a of we of the -- bit change of in when a amounts So way borrowing larger

from Cowen. next Our comes question with Bryan TD Bergin

year the you I mentioned come. versus And spend of an better-than-expected investments your think, that the First XQ? view you down, I prior aspect I for question to AI versus be outperformance drove Is versus comment is I'm plan? that had within Don, was that on some I efficiency. margin. on if EBIT curious timing incremental think, in Can the to heard Gen what

of question. let yes, first start, start So Brian, your part let with the me me

So bit in there little modest quarter. of -- was the a revenue outperformance

significant the bad we out that contributor. There's call expenses perhaps a little timing, And bit then margin. of of as expenses. and things, some think focused always nothing a et contributor to little bit So of really a had bit was we on I to have a cetera, few little a debt, head a but count,

the In through spending we spend, terms yes, little were we we bit said going quarter. last of are worth a GenAI

a of It's of have we know So amount, do but to things like in I spend. not that XX bps. lots incremental measure folks a bit huge

an in we little said incredible So calling prior than the bit a we out. amount, it had are quarter. but Not more

just, these you monetization kind view Is dynamic And the near-term able of a think I that's or guess for Is and scores so higher? And understanding kind you're drive Gen longer-term to do Okay. the on or I you're about of an monetize and so follow-up differentiation feature enhancement AI leaning directly that a CSAT feature dynamic? GI offering you assist developments, of more modernization more then kind this into you're then of guess, here. a ADP free product a to products.

for really So think Brian, talk The I through will, overarching, phase tools about things next using we're just that easier. call is brand, way products the new technology. digital it transformation the we're ADP things you that Assist ADP of to to really make all that it, our is into if it's leveraging putting and the

make for to to commitment charge always business. it differently, make said is to our as our as payroll possible That do is has clients to easier to have our things intention to accurate easy to been payrolls. our So process clients, is not

many effort not change step since computing digital the so And new candidly, the that underway the really era. as just monetization a of transformation had we've the leveraging decades it's it for stands. It's technology dawn many, about

about we're of of assist terms that's -- ADP kind thinking in how So monetization in general.

as Do today think the about come. will in Of long relates it about to to that dollars multiple dollar right? I term, it's So believe years in yield it, course, for I we're putting Gen AI? dollars more there's think I us monetization the

features be retention market various perhaps the in be incremental the products things So monetization will of over as also opportunities AI into will my are bookings Gen about that we distinct investments and long today lead, gains that term. mind new that think retention proven in to will nature, there to There in functionality. as and drive create we sales and

dollar it's you with it putting a think I in today many et yield the to margin well belief So that about dollars will, if as of will come, as cetera. bookings,

Samad Samana comes from Jefferies. question with next Our

professional business services. other in within than of side PEO of any the seeing Are maybe the and Any I couple change like verticals? the the PEO PEO know of the big last business, the over saw business in you that guys exposure I the technology on curious, expected out guys called you inside quarters? there more had that or change of trends softness bigger some maybe there's you Maybe the some in verticals was than and you

in professional specifically, trend stabilized. The have services

deceleration. made the And the no it's comment so earlier, I longer think contributing Danny to

the acceleration than to contributing this stabilized to per contribute services was to a we pace time. deceleration used ourselves cohort largely the it to of used So found at it control and where it's professional

to in this increases. you how Got about just competitive of are of customers thinking year's the And you of we pricing know look what about or onboarding discounts or annual are price as not the But offer? having is when ahead think what your price of just deals offering pressure as at increase? competitors change I nature in maybe kind the terms ADP you. are still increases, company new price for new does And any you the think about or environment, that price as that for we're

really changes, Yes. a that stability, we think appropriately. more we're priced we any environment. We We're bit seeing et think always to with the and we're Samad, better And premium acknowledged happy environment, in but we've service we're that cetera. the price not little competitive because offer a others,

So changes. no real

pricing is in increases looking off what's year at the It right. X of weeks so, for next regular weighing bit and the cycle really. kicks next being. be here a we'll inflation certainly budget little You're all The factors, and or the X,

We increases thought were thought the keep always, we're and as in received were in the long-term line so they interested clients our We our last -- we'll competitive being But always mind. with in that very price market. year. in well value

think that we our do increases about we're price out So clients. always the measured, believe, hand we to I when

Kevin with comes question UBS. next McVay Our from

but you what on on that's revenue Great. philosophically a can I thoughts is picked to remark, shift you the it us think Maria, be kind Can of little incremental if Maybe that right? a implementations internally I of And maybe over the I heard of bit. if talked done implementations up percentage remind course the what any just wrong, today? that?

I bit of soft, Yes, derive what -- way, and maybe, the Kevin, hard revenue hear, little but a to was implementation a think by yes. bit you're you're question from but kind the we

overall our revenue of sub-XX% from fees. substantial setup a not it's So comes internally setup we call

substantial not amount. a So it's

that? margin see initiative? way you is time? to less become impact outsource if Does think you over that that do any then down And about the And that there from

a stream conversations. not like in for have have it's had with from they them. I control client which opportunity have to through think you to that parties mean revenue sale We live We over the to that third -- work I certainly go from time we there's help say won't outsource to would to time, folks of like do. big also think to us we because lots so Well, service, who certainly us don't a no, our there. We implementation

but money scheme the of around implementation over a the factor accounting, there and set-up not Certainly, of of some that it's had, interesting There's deferral some large that really there's terms large factor. the not contract. to course, But the in things. and it's overall also fees be

So lot anything, make to do near changes once of the any changes again, financials a in term. of it bottom take the line would

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

is change differently? and Is acceleration. it's to ADP not wanted I on or activity the Just demand prior doing a PEO asked like confidence understand in Or the there. -- lot dig cost doesn't comments. anything of industry a know healthy on changing. there pricing your sound I there's the of people and

So I that. I understood make just want sure to

happy I'm bookings. to about talk you. Thank PEO

been our mentioned pressure specifically in prepared paramount think momentum. to has the having bookings. is so the focus that of that the really fourth overcome And pressure expectations kind a on we're for quarter. pleased of I we This of and for bookings in most seen that, second the certainly, the PEO the we've been with very has PEO delivered on QX pays the PEO the exceeded control is that which in byproduct positive that bookings And -- why -- us. as remarks, our felt we quarter

a from know. all I of demand terms PEO the speak about time, the In perspective, you as

anything focus demand unnatural I side, continues we incredibly of the that strong. anything ensure bookings that that think unnatural are terms the to outside a we're or tremendous but enterprise to doing executing across demand amount there's wouldn't changing. be I on of PEO suggest in the of

ever than I as proposition, I think it's the value say, stronger been. always it's

complexity to and think the business payroll execute to having them being in on space toward a everything to I proposition, PEO navigating relationships. from a that of so employment clients ability value from are our the benefits to looking help ADP

would strong say I is as value the it's ever been. as So proposition

as that we I think us, momentum we had PEO. and The fourth the the The marks positive an it -- QX, that pleased really strong. there. to on bookings PEO remains see organization lever I'm from did and just demand of is for in focused this execution quarter is bookings

you. Thank

with Our Kupferberg next question comes Jason from of America. Bank

is on This for Thanks Jason. call. for I'm taking Carol, the

X% 'XX year been But to the first for X% X%. guide So has quarterly full per control pays still the through growth is half.

second Or end you do deceleration? that drivers likely? has become the the high So of more think what the are half

to still in in said the X% We to in. we the it back for built certainly be X% range question. slowdown thanks year, any we not and we'd would the for certainly have to for we're that X% go -- have pace anticipating Caroline, but half. really X% control, we

bit a little perhaps we're there. So conservative

than coming confident on in X% going for today, sit X% than declining continues hirings think but employment softer we're NER to be to not the to we this although in be as demand, little were. there, growth. year. there, we I But demand much report, still really saw employment a Not declining be demand But labor robust, maybe here markets somewhat. our we're they still the a still say bit to the other morning that more that to as But -- range much in bit, out half, still back -- continue good

don't think that a not around of So color. lot for I extra pays control.

Our Dolev next question with comes Dan from Mizuho.

Great results here.

question. could debate to if months, headwinds offset XX declining over there there a the big idiosyncratic that a strategic the the from in interest out maybe do some interest about look rates. Can you Just headwind offset XX initiatives of next those to rates some talk of down, Obviously, ability on is to are coming you you terms revenue.

that up, question, activity, start go macro increase I activity. up, should see macro economic go cetera. in guess. if really that's economic increase think we offsetting et a see guess opportunities an to I rates we'll to in bookings we decline, if see we just I be would that that see revenue interest And answer should the

that knows. interest whether So there's think or come cuts of lots down et I if and rates debates X cuts, cetera, it's who X

so today, we down, on thank if come a avoid call they recession should certainly do But recession, about asked nobody's the you.

not consensus is recession. that the I going think to be there's a

suggest certainly, last healthy that the report. X.X% GDP is the in growth of polls with So any economy

to So economy come should down, contribute healthy growth. economy continue rates help to our and a should remain if the healthy

curve. model at as add on just we're rolling reinvesting you the securities that our embedded are involves than And the higher in further still off. what's also, know, out yield reinvesting I'll Dan, rates

that this even obviously is reinvestments point, if on offset have fall year, of see short-term rates yield we by do be the curve. So which to that out will next we at further start interest lot consensus a the

we outlook would for too you mind. And but about interest to that talking early just recommend specifically in so rate keep year, it's next the be

that's fair. Yes,

reinvestments, higher current if look average at I yield X%, our which up is our our think you than reinvestments today. are still

are there So still opportunities.

over the of much more grow have grow to is months. flow, But continue to expected there's XX we to at going upside. is the than to last XX not Certainly, quarter. which end slowly it's perhaps would as float from expected Our next upside

Christiansen Citi. with question next from Our comes Pete

just questions. we any Two market. fully if client in you've that particularly down in changes tactics, lap noticed demand ERTC, now I'm the competitive curious or

pulled that the Yes. I and Pete, was the forward what you referencing quarters new ERCC, is X actually. you're think as know, deadline

potentially So actually, the is as today. deadline it stands

But with execute execution, waiting in having you still kind of will, our mind. of deadline. if new think of final on arguably, we're that I behalf clients today we're for the to

pushing there's that And so tremendous of through are a our on behalf clients. amount volume of we

way, pressure clients the put are to system, into navigate the watch which to this and livery relates be as trying it. it hard witness has the the challenges to supposed by it And to helped that they're is by and that facing,

doing everything we're we to help these So process can in our power and claims.

financial as isn't of to relates In for impact a terms ERCC, it us, to financial impact us. it

We But engaged the of a for been very our undoubtedly, today as it relates more overall about standpoint clients revenue really looking to is anyone really business thinking overall is as deadline of of minimis and it our relates some our I towards it. ups how have in we're to supporting think as a not than used incremental. it. as de the what it revenue to our competitors to ideal I -- think a about from has it's it we're relates advancement

and And curious, Do certainly M&A portion through big you see cross there you. a big border. add like things. been and even either That's EWA Thank theme, of and payments payments disbursements obviously of increase into I'm a combination is thinking more of partnership, penetration on functionality not I'm helpful. perhaps to capabilities HCM further then sorts the has opportunities that to

Pete, strategic employees and clients offer engage to how is From us. our a standpoint, what they with solve I for continuing and would

cardholders we wage like or in our had paid X.X something the that. widely time If ] XX $XX million. was you disclosed last imagine talked that across we ADP, U.S. think million about [ earners we what offering that's I we

kind opportunity, give scale just of it. you you So the of

clients that we're of anywhere clients, can and suggesting as our We and right? whether employees it's about with you're how way EWA our the to of to increase out partnerships any opportunity the we our the actively and other the of I payments ] employee work, easier for it make world thinking engaging the there through move it talking believe about and value in that's are likes life likes things of clients' and we're to do through tremendous [ or add think market so through it's we type widely, flow. there's that And end the can in

as ADP's and apps. clock which move XX are the in way, our app, through actively that So through users using million they they day mobile mobile ADP by their have we

ADP, go us the with as we for mind whether engaging financial of there, they're discussions there strategic top as think for opportunities So things payments, wellness our like that's ADP. apps future as like through the all it's like are it's things insert are like us These wisely. value to through for have we things about EWA, app partnerships and we companion in and

Ashish for last time Markets. comes Sabadra and RBC with Capital question one have that from We question,

improve than growth, it see a on that year. we following through the multipart fair to there just we just sorry, improvement on PE to commentary, see on is paper continued we control us for PPC what of solid headwinds go last -- -- should better And the as we up commentary sequential WSE and to year. So we have question saw as continue assume that some a at and bookings look given the the earlier moderating

you was any on revenue puts positive, participation, drive if takes, if anything per could comment And trends pricing you could better worksite I looks are could then on and revenue help but comment per like WSE, wondering other that on employee. else

yes. question per control bookings that do side, to the with on answer is So retention coupled your more half. of back a in with getting stability the coupled the favorable expect the contribution, bit pays We

pointing lead should few mentioned things those other back we've think I to them. the reacceleration in Don earlier terms that mentioned half within PEO, of in that of of you to a been components the the All

what state these here waiting those unemployed, are per there's outcomes. of rates payroll this an terms compensation, to things those we're issued obviously, really that unemployment see that I'll There's Most work throughout state of still are things of, give sit today that example of there's in looks -- workers' some you like. we forecasting quarter. unemployment of the one

know do of some And expect the state year-on-year outcome. while sight, end, are down it again, have a a year. this unemployment bit what don't again so of that entirely will going tell. We we But rates in we the little creates only line time

very the make what's Sometimes broader an example, strange labor a unemployment and line as in decisions that states, happening with perspective. always aren't from

So think could strange all any of out componentry sit -- know that you and the today give I norm. here I I seems say, or don't to that

the reacceleration I toward look think the in things all as they watching PEO we're we back are half. of the

Black call like you. remarks. closing I'd over Maria turn any for back the to Thank to

Yes.

a ended is associates I'll my ecosystem all and think remarks, end entire the I out quickly, how with really to So the which huge I prepared across of shout ADP.

really calendar that QX in really all channels good good not accomplish we'll what just contributed a was stakeholders solid I'm partners, associates, ADP XXXX. the about what a of but half. half excited 'XX, and first solid to in back fiscal moreover the that's So also but

year going is in company anniversary. year about to years. wait do -- exciting I and can't an next year time our see the over think I actually and a for XX the when we're this I decades This can't It's the to X XXth see ADP. And last that we it's round XX. what is

to you forward into you. with XXXX celebration head that as of in look sharing all together. Thank So we

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