Earnings call transcript Q2 2023

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Operator

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 2023 Earnings Call.

I would like to inform you that this conference is being recorded. [Operator Instructions]. to call like to now would turn over the Mr. I Vice President, Hussain, Investor Danyal Relations. ahead. go Please

Danyal Hussain

and Michelle, you, Fiscal today our our Call. Quarter everyone XXXX Participating Don President CFO. Black, Maria Thank are welcome Earnings and to and McGuire, CEO; ADP's Second

morning, for quarter. Earlier we our released results this the

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

believe non-GAAP certain to During useful the to of our we will can measures, exclude be of non-GAAP reference the investors impact financial these GAAP release. measures call, items. be that and measures with comparable reconciliation of to which in we found earnings most description items, the along A our

forward-looking future current from the with could factors also refer We cause that to risk. some actual will on events materially involve for you call to our our to encourage results that expectations. additional information Today's contain review and SEC filings statements differ

over I'll turn now it Maria. to

Maria Black

Thank currency growth. and results organic XX% margin EPS delivered and XX% ADP headlined basis by for strong constant everyone, you, expansion; joining thank growth; of adjusted QX XXX adjusted points EBIT Danny, revenue us. you,

and market the We as meet continuously diverse, exceptional clients. our million the local needs value in more ourselves continue of to exceed in innovate changing we deliver HCM to invest and than X

bookings included highlights quarter. which QX, strong In business some new we December. the with from very start incredible growth, finish I'll ES an in drove

in platform demand international stronger QX performance, QX. our HRO our ES to much sales a We and softer robust GlobalView offerings our see across our after have portfolio downmarket continued especially and was

we clients growth of first number well for staffed, and well bookings our sales are the to and the Overall, our positioned for and with a of we are the dealing still solid year. year, results healthy, half pipelines deliver the feel are of uncertainties, with pleased although remainder

year-on-year just shy result by slightly. upmarket, of improvement with be in a international pleased down again during full of retention up guidance strong pandemic continued normalization of the our in we're businesses. out mid-market, QX to was retention market was ES was And led despite source This record Our year and overall modest set outperformance taking the once rates. and our business our

Our X% pays labor metric by cuts labor per growth slightly number our in of recent had companies, softening was U.S. you yet Job reflected in from the Despite see for as which have control market decelerating but slowing, job quarter, market. has anticipated. client to QX been base. remains we noting in solid, the see headlines the clearly we broad-based

worksite Last, solid was PEO, our X%. average growth our on employees in at

of previously have With we're course employee While accordingly. healthy. solution to our been and reaccelerate well The remains secular bit year, to said, that faster the a assumed expecting we was decelerate outlook opportunity growth. pace than and are this worksite we growth positioned we is for unchanged, our adjusting demand the over PEO growth the

want quarter, our Stepping to back update provide quick broader the on I a strategy. from

heard products. you've years, about talk our a several last us the lot modernization Over of the

and enhances Our solutions ease RUN of enables seamless integration more and simpler for our experience insurance, Workforce to and user key Now, platforms like like a retirement use complementary payments.

position front continue have our more fully more retention HCM tremendous These Our new of to set software. back-end example in clients. like just Next opportunities HCM solutions, it us. our than much product to designed enhancements certain opportunity But been has Next offering and In platform than engine solutions about address before. new of modernizing in Gen always our Payroll broader higher, the us even drive HCM a prime and we're win strategy a Roll are of Gen we how to mid-market to of is rates brand offer we and

of ADP their are and needs, in for of the clients pay, retirement solve hire, but clients, all and find, for also with modernizing advise provide thoughtful the help starts our on these go-to-market to compliant a onboard critical we support how approach, relationship. we even them how way. to product, workers and client and engage, them extends us want That our we issues. aspects To truly

this here as And Modernization journey, are collective opportunities We incredible. Journey. refer to the our effort product our with as

many down for friction of to our U.S. thousands We market, the continue start. making are onboarding time ways. every and accelerating In removing easier tens clients of we to in client enhancing and digitally clients experience onboard our year,

the seen this we're the and Canada. in U.S., We same success have scale in capability beginning to

Self-Service Intelligent client in helping reduce base already from answer automated employees of a our is portfolio, process. only now our launched work through for questions of Our a portion capability we're And millions completely last implementing well. clients client to quarter as chatbots international those

bring brokers relationships benefits We and provide seamless partner we're robust trends, with for frequency deliver advisers, and the continue CPAs severity our integrations to clients. of workers and financial to of experience our in reducing power mutual better to aligning claims, compensation deep invest to incentives. ecosystem, a to legislative cultivating insights credits And our using to clients identifying other pays the greater from data and to value extensive to tax market

establish to significant today businesses: to our ADP with fastest-growing bring look one helps services, clients life, and environment retirement us to stay this a administer Modernization them legislative these face navigate I'll employers change and Journey which speak complex our plans. of and help talent compliant To large-scale changes, retirement to challenges. Businesses address

improves X.X employees, for recently and what we've consider. passed for to And space retirement partners, the employees businesses their designed easy over alone sets the life our the market. clients makes has and in in provisions XX example, us the wellness of Act apart SECURE For financial specifically, and

Workforce with Our with investment clean to deeply not Now. and framework, robust XXX(k) also different intuitive, of RUN thanks UX solution our is is only and options thousands new but integrated

we clients Connect positions a client's our platform To for a with employees. us financial their in clients difference partnerships strategy. we sales Advisor licensed, talent on to like tenured, our community platform unique a retirement and mutual and serve our highly Accountant make This CPA developed which recently expand much developed to Our better force meaningful understands ago. the the called solutions years advisers, services Access, understands

And obtain credit team, their of incentives. our to their there help full appropriate tax experts apply or in and clients legislative our field, for, is CPAs the

to clients turn improve our goal Modernization their long-term our full in end-to-end for sustainable in our experience is contribute Our consistently and which and employees, will profitability. growth Journey the to

to forward updated. keeping look you We

Don. to over now And

Don McGuire

for you on our on and I'll 'XX update good Thank the quarter you, outlook. everyone. more morning, Maria, results and color fiscal provide some our

Overall, despite I we we trends in revenue had incremental can strong generally and little ES segment QX had a both were a softer developments Meanwhile, expected headwinds. our some on than in margins. PEO. positive If our summarize,

and ES constant on I'll Let at the cover our Maria X% results revenue ES outcome good currency quarter. and was new outlook once. all a basis strong basis mentioned first, and on increased an performance in segment bookings QX. reported on which organic for a me focus XX% business the

feel range maintain think it's for macroeconomic for back Given half. positioned although, our guidance current to well we uncertainty, the now, the we prudent continued

This XX in results full in normalization revising we're retention expect be ES continues points up QX, to year. and to we losses now in outlook ES XX basis our with year-on-year, near-record for down retention out-of-business had also downmarket. our the first assume to We half retention only

the Pays now half pays are with the the improved, QX, outlook of per expectation we somewhere year our rest we to And but line headwind back the about revenue. for to per is and FX, deceleration other of of less control over There are had revenue few pays previously on X% in expect outlook percentage in better sight control ES now assumed than on are between for X% as year X% the assuming were bigger in control developments now per well. direction points the growth in slightly developments year. with our X%. were X and positive in full QX, the headwind we in Those but line a QX, did and we of raising

around by the the Together, $X for to due assumptions rates $XX worker earnings. nicely from growth revenue provided they X a tweaking for also primarily impact down mix, wage lighter because We're lowering the months revenue now full and but net was payroll prior midpoint primarily our we Client the X% midpoint was average related at to tax impact X% when ago QX, funds we assumption than the tax in as the our to This where of balance lapping our interest is outlook. at yields of year year were we are million up to million well slightly as back for growth had the planned. bit actually pulled to deferral.

and also some business. trajectory our our our outsourcing growth X% taking We to recruitment to our and saw verification guidance growth about up in businesses revenue good Overall, we're underperformance expecting the feeling X% X% for by though, volume-based employment are our year. of of now like ES business

which margin was change line with basis QX, points Our and XXX was year no in full expectations in ES our there up our was for outlook.

the us. in a the quarters and headcount clients further win to the comfortable existing last organization levels As secular back as we with opportunity although high see as feel increase front clients. reminder, several other scale we've of over we with And new at areas staffing a may appropriate, we opportunity satisfaction in level, continued in and sales, growth throughout against invested product our

revenue XX% in PEO. to with We delivered on QX PEO in employees. average Moving growth the worksite growth X%

the benefit than tailwinds, still was long-term shared, from the outlook. to a in business but our results a PEO to Maria from The and variability PEO is softer which bit pandemic, As effect PEO lingering adding results continues came expected. there

retention, very magnitude. PEO bookings we are worksite overall our still growth. that results reaccelerating and same-store lapping example, and demand the with pays employee solid the focused assumptions see playing And strong a for about the continue out are, environment we trends consistent to while refine on remains continued our in expectations, pays. said, team on We With and

average our X% about to in year, margin X%. line expect about flat PEO growth X% this revenue to in XX PEO our margin are PEO basis X%, to for we employees outlook be to basis was continue of to For points to by up QX driven XXXX. and fiscal points lowering XXX we in fiscal expectations, up worksite with

our to our by outlook up, ES all PEO revision it favorable is the forecast. lighter offset largely revenue revenue growth Adding

continue so 'XX. to in of growth to revenue expect And X% X% fiscal we consolidated

basis maintain XX%. expansion XXX of our adjusted We EBIT tax effective by for about rate repurchases. of growth expect XX%, margin XXX outlook we expect be And our our also continue to to to supported points. We EPS to still XX% share adjusted XXXX steady fiscal

on quick cadence. one comment make just I'll

relatively consolidated were we expect to steady in revenue where growth QX. from We QX be in

to compared points a modest We expect be perspective, more onetime item margin of we There of QX, expansion. to expansion experienced the XX to lapping in including to reasons, basis what XX bit a closer a that about QX. were last few certain contemplated this year, sales and in think for for helps assuming comparisons but change we're QX. no investments and year, a you major marketing Again, headcount full there's hopefully, the from

I'll operator Thank Q&A. now you, back turn to for the it and

Operator

[Operator with Instructions]. And take question Ramsey we'll Barclays. from El-Assal first our

Ramsey El-Assal

is having On large really is impact. Is the environment transient? exposure? pandemic small ES? to market PEO, trends versus I something guess, vertical a it mentioned you sensitivity you Is more curious, this macro as is of it -- just I differently the PEO and there lingering impacting see is than clients? quite is But Or market was question from labor the effects an

Maria Black

I you, Thank appreciate question. the Ramsey.

to try asked all on about. that the PEO the you ground I'll cover So

to come So see mentioned specifically, what that as did see, that the did respect we did retention half, in first in as than the in saw a our prepared softer. softer bit with well saw We remarks, expectations. booking we we came

of impact the the that our say impact. is we an the I had would from probably In effect that terms pandemic. of all one most the cited, the PEO had lingering businesses

health to wages from the If to benefits. insurance, you and worker about workers' of paid mix certainly think average all it's everything PEO, constitute to the lines unemployment the that drivers compensation

business. business came that impact had the is business. the into I having say gets flushing effect lingering it's would the a as it So pandemic pandemic out, the as the on the most And

you expected. -- I is say ES. context contributes think what PEO. on first the to control pays seeing per softer But slighter decelerating performance the it pays per we're to the rate is second in in half to in growth in I respect the and half. with was PEO would That the is the of contributing touched is, the control If

back for the first that of I go business. the want because drivers I well as the the main retention. in half strength are performance two thing say, behind and second to the the One half But really outlook to as though, would bookings

faith absolute from The expectations. perspective, incredible as softer a We PEO than still perspective. relates it is form long-term and was have business growth ES our demand year-on-year, in bookings from growth did outlook have to the a that the albeit there. In softer than it

Ramsey El-Assal

business, Got Tech guys headline just but -- helpful. vertical? from it. layoffs headlines anyway. in thought follow-up of been sector? I'd very kind acute And recently. That in I How have a was Are have I tech quick know sector me. a the the to any super been impact technology have you all you particular you are ask feeling layoffs for diversified kind exposed those that of layoffs

Don McGuire

Yes, Ramsey, question. it's a good

of day And the to we're clients world of clients a those in are of say announced of number major fair headlines people our avoid with some are all necessarily cases, large it's around layoffs seeing the not in names or happening been -- in, that out. they're layoffs, markets. also layoffs there's tough that those day hard -- to some it's some the that are I think But those our I'd those have that say to making our clients. all

half. think for out reports, still continues lows. to that just increasing. not look own it's strong have impact also control Unemployment that on by round to record be guess those JOLTS the doing Everywhere back not from internal I And significant the demand. saying, continues but it you for still Unemployment very They're up per strong that BLS are pays we're all employment. to looking perspective, stronger assumption yet say still our the low. see And So we suggest any at taken announcements. reports. seeing We've we're I'll I fair or just our to in applications there's we're demand

be irrespective of continues to seeing. So very, very that us, those the favorable for we're macro environment headlines of some

Operator

comes question next Our from Simuni MoffettNathanson. with Eugene

Eugene Simuni

about I ask to wanted ES bookings.

commentary, performance strong So there. it positive like a sounds

And key called I the bookings pulling trends pressure and as think little mind talk strong Can How their in are out companies a the you seeing you quarter of tech everybody's there? you yes, bit are any mid-market? versus international is, downmarket. coming potentially back on I as the back question last about signs also macro think spending?

Maria Black

overall Definitely the cite pipelines. our the our quarter. strength downmarket, in in saw I'll a with new an that's pleased portfolio. very pipelines for entire get were in acceleration that I We we're business the the bookings second really downmarket minute. did seeing the downmarket,

both was international Services. second about our most pipelines off the tether quarter, the GlobalView Employer in services not that but back in at the see length retirement offering, And the things the that And Run see bounce thinking remarks, well strength Run So I as that mentioned really but is our the results. to offer, was during spoke the all HRO. that prepared then our in as -- did last obviously, least, one space. which Insurance We of pleased was, things in Services other I of to as in

So very X% strengthening results, what the pipelines. happy about happy of with think gives as guidance of confidence, our with we half stepping to heading the into very toward the us X%. back That's

perspective. is the legislative about didn't yes, mid-market we as solid that that getting and for both from -- mid-market to the I a there perspective to We well solid easier see cite as an not had a specifically. very continue as think anyone because of talent a you wanted certainly to demand know terms employer, sales, also In I be byproduct very

in investments incredible the that relates product have we've as strength made. business it to We

what about So Payroll we're think Next the attaching experience user Generation with to engine.

So We made strong we had good product NPS. enhancements.

We retention results. incredible have

we Services pandemic, is exceeding solid the that's So sustained market, would that mid-market also forget mid-market, the overall the offer experienced growth as an and say contemplate What the Services a Employer during that call growth in area in general that Employer that the growth. and you I Comprehensive HRO, performance. tremendous squarely has had don't Services that fits sales is, and

solid altogether, So net results are very mid-market us. very, for for the the

Eugene Simuni

And for me Got Got helpful. per it. control. then pays Very it. quick on follow-up a

was of by expectations. from also outperforming that strong labor out thought, X, number we the sustainable of maintain your U.S. X-point the But broad like Your X market Remind to market Can very kind labor the X or you quarter that? payrolls. us nonfarm keeps of as the down? this point driver measures in overall what's how that premium? growth is And slows

Don McGuire

is everyone it's really question. number. a remind that, number just Yes, to that good a But mid-market

focus on control been per pays So we has And when it provide strong. that number. we mid-market the

As the to see strong. I our the to respect mentioned labor We're clients add environment, market in existing the employees. earlier macro be answer to continuing continues with

it's some As at question to $XX,XXX the stay half. with and think for things about strong. taking future. headlines Maria will bookings what market can are we've of we're those as the control Unemployment converge at look back the can said, think But growth start I low now, pays so the the we per done in to up point for the terms how in comfortable And some grow. labor the continue of I long kind of

Danyal Hussain

I a function overall economy, things healthier being the our also bankruptcies that labor X% of X% total in pays clients just to environment, maybe point the general new economic total that normal but fact like includes to spread, in And growth business X% bit growth. than X% And employment that's a that formation. your and perhaps we past, control expected Eugene, think and having would have to per about in existed compares typically, the to

employment. slightly a it's So take on different

Operator

Faucette comes Stanley. James question from Morgan with next Our

James Faucette

perspective, it. it's company we you and bit, been retention wanted normalization a you quickly area especially to are to to -- think retention expecting on but made I I improve point that an least touched tighten. technology some little or continue a that But but had but Obviously, at are that performance. -- to what revisit to some just other areas, it you'd from seems where et any, if cetera, drive helping see advancements,

Maria Black

pleased we the to that are quarter, first we very, Sure. We at With respect Thanks, strength James. cited, very we've the year-to-date. retention. end the of record retention, seen had by

near The was second record. quarter

was a first If it you look at the record. half,

-- of strength but So we're and of investments. saw believe the a broken very proud and byproduct record we it the -- that to we record, retention the a the not be that, is

I alluded the to across as of seeing record mobile in example where the the app, That's also broad-based the investments mid-market, into our made RUN we've now platform, offer, user retention. our international an international we're experience.

believe lot just a So experience, driving in better anchored things into user driving we really are product better the a of a place. these

think I NPS. other is the

portfolio. strong have that's We the broad-based results service across

a think continued, generated during we tremendous think how see the goodwill clients. side. of And chose service to the we amount that results that and I in we is value pandemic value on -- NPS has our the and and I

another that's think I place. So

normalization. did touch You on

do it's an for back fiscal we on to normalize and bankruptcies to think retention point touched back levels. We client, market, important we the I average has this or I size down When in to prepared think remarks. 'XX the fiscal downmarket average 'XX, of really believe are business normalized. out point, it having for we adjust believe make. that the during We specifically do at even

do believe the normalized. that downmarket has we So

is result a believe So it because point, again, kind service is one that we strong levels the back broader offer. the it's investments for we this us that the a retention broad-based. of really to at And of and picture, very

James Faucette

attrition you we an of what a were interesting et to point kind be you're already that's pre-COVID. least -- were think at where should least compared Maria, we that at perspective, So cetera, from where

you're some you the companies into quality love seeing seeing seeing we newer competitive now Just Are how or what of helping overall? competitive are an from to entrants? players you see the the concern. regional of especially, update What environment flight factors you? more Is that versus environment, as expressing

Maria Black

could competitive environment -- on is to continues I say certainly it one The evolve. hand,

hand, report. new would there's other you, I tell really the nothing On if to

very we rate. I think balance at of what look our we're and trade, we seeing closely very at win closely look our

product And such measuring such We're whether our the offer the win correlation as have. what is and that make all would and we're impacting and investments there win I brands, suite that's and balance next-generation not we they're headcounts things rates or that, the that as downmarket these trade direct mid-market of is we our a rate. the between our whether in the places or investing, go-to-market and the into

that the And think so getting in of a that. to record stronger we is offer. we're do correlation I direct our believe terms retention And

Operator

comes question Our next Baird. with from Mark Marcon

Mark Marcon

offerings you new And of offerings. modernization next as little well can should of from you a mentioned terms over wondering or we how expect in X impacting expense terms a both increased expand in that? think that, Maria, months would as there revenue was up about a we should to I'm initiative. bit what just from if end XX the perspective? on that How

Maria Black

love I investments making the Modernization about Journey. speaking Sure. we're into the

maybe, And so next about to revenue thinking generation a I around And the the can and cover perhaps, the XX how Don, want that story the over of if we're from the months you side. perspective. impact margin XX, next offer

initiatives, it quarter which things alone, overall all Employee. prepared to friction, we Last Self-Service, that I in taking as about the Voice our is removing remarks, around of Mark, relates work is out. there the talked about the Intelligent So talked modernization technology, tools,

bespoke are more layering and into make and offers, competitive the more into to value platforms bring market. these So to were our that them features, our functionality

given We've over And build we of implementation. I the With see us Next build implement I time. backlog, briefly scale, next to continue to that our think on HCM. continue platforms, respect to updates generation touched Generation

have months set upmarket to over next Our a to clients. goal horizon that the across suite XX specifically would we time aperture your sold to of XX broader be -- use would the the that open

the Now are the Payroll, in Next Generation offering to of attached we mid-market. Workforce what is terms which In

pretty We clients there's perspective. the the of excited Next Payroll, progress attaching Now. Payroll from quarter, that Generation on are increase continue progress towards about we Workforce to a Gen Every that an make Next quarter number of

So QX to we QX QX, we had from had to I -- think QX QX more. QX, or to more. From

continue about to XX% As to attached. running XX% attach again more more, we're and

frames using XX offer again, your goal next months, seeing, the more to time mid-market. again, great X would -- continue specifically, over rates, So things scale across and XX on our signs that broadly to win to our We're be offering like that.

I think the we to Roll. that it's other downmarket excited digital Roll, or that -- project, speak product incremental the which native. initiative an I offering Very buyer to we really not that would our project call is product our we're about that is

it's digital learn and scale buyer it such, again, its a capacity. we digital we believe end-to-end we wants continuing will all to learning. that how milestones. We're as payroll X to over We're across. so And more the will to And project of understand a months in XX consume exceeding next

will revenue. of a clients, meaningful as that that's whether make for will and revenue is tell broader our In able the of bookings. to in being to really would us, make the to revenue offers, the those to next But Next ADP. addresses, generate you, the and offers competitive market Roll Gen XX for new rates that sure a the X onboard to lines a the And micro will the impact of that's piece it's -- retention win excitement impact mid-market, over a HCM, meaningful to revenue drive upmarket, Gen narrative. the I'm meaningful and revenue, projects terms those in changing not the an lot They months, take it impact And it broader the any certainly any the I make our impacts that in to we units Payroll. downmarket then to Next

that, and Don with I'll of margin any I'll stop to So impact. speak let kind

Don McGuire

comments. on Yes, just Mark, I'll follow Maria's up

improvements revenue to penetration adoption I quarter, is doing think is clients to million we in I But achieve. to as these the quarter expect of from within some exciting And adoption time, these our the new take the to the see existing going we think have increase and X at well. products same rate offers. time

I new to from sales some through that say take you've way to impacts we those But its make the speak. to those transformation heard last margin of transformation the time transformation us bottom themselves. opportunity say about that often and -- exercise, line, years. So is these our new so would to think clients over I is would I from going biggest calls our the internally, And speak few these products coming biggest

about in to help excited to future. do going are going think us they're offers, and new we we So -- they're the out these

Mark Marcon

through ADP That's terrific. And track what in recession, if a could into from navigating go recessions. potentially obviously has of, is in then obviously, perspective the everybody got headlines, successfully a macro concerned occur a we about terms stellar long-term record of

we a expenses? et cetera. philosophy of things go in would recession expenses, terms what's term? manner But adjust long your to going a just focus you on if short-term in Would Or Maria, into thinking be I'm about margins, you do wondering, the to

Maria Black

do We you recession have will. if a playbook,

go-to-market. I things as way When of kind needs down. talent you is, we our way economy, first that the think address on happens thing how converse up about such we an adjust the it's think on the the in

So that's is are bring things I be not right, the that to business impacted. be the to it that reason would that action. suggest things the is, up bookings. self-adjusting, And somewhat The as like relates wouldn't impacted it

of the the in also bookings, is absence there absence of So expense.

have incentive selling volume the the as we commissions, if there's byproduct lower that on could implementation overall also, in, comp. coming volume on We lower volume side self-adjust, thinking lower on that, of a of some side So potentially and would the service sales side.

of maybe nature. be, few will these there playbooks a are And times my run all in so lifetime. that pullback we've that hiring a before, things And in

an happening. to prioritize we're the investments I one But we've what's for going of event will, long most continuing on to committed transformation. last to and bust. or on of et juncture, big here that dot-com, differently, -- this I've financial on if the a And choose be crisis was you key it recent it, even call part enough -- Modernization the may We been lessons think it whether XXXX, add was work very we're us the doing pandemic depending or the and the cetera, been downturn,

in is, would I say what investments will And maintained. growth be our

the that downturn that's so the execute we when make we think positioned a of key smart ensuring to come quickly. decisions we're that is out downturn, I during

made was us on specifically, the and on wise and allowed during some steep fast. go-to-market, short -- the side we seller think that I very we because pandemic it lucky decisions, the were

And to up, well that positioned of we as advantage everything make. investments opened market to were the because of back continue we take that

to your their we somewhat nature, make I are changes most question, of were So bookings answer if would impacted. in the think that self-adjusting

Operator

Our with comes Bryan Bergin from question Cowen. next

Bryan Bergin

First had pricing. on one is I

So the view contemplating levels you ES pricing, any around change entered the just I just higher the when macro? were claim in you acceptance any to change in given that fiscal year, think

Don McGuire

Bryan, for thanks Yes, the question.

I relatively a well. think fact are it's short our holding is prices The answer.

at of that kind previously, comfortable of end the and we're of the are fact, we a As guidance high would gave matter say we that. I with

as understood it scores, increases retention, and look at NPS appears that be we accepted we our well, if could have expected. think I at as our those been price look

Bryan Bergin

Okay. hear. then And on Good the front. international to

talk about quarter. just in drove you can the better So the saw Europe that in you performance what here

U.S? does not better just but earnings there's U.S. whether in material, I'm cited the demand, that in control that So Europe curious base behavior any base? solutions what also the per on that performance you level the really underlying employment particular or different here in And that imply versus pays drove the

Maria Black

offer that We bit GlobalView in we were by improvement and business. the was a driven It our mainly very in-country of saw our bookings. pleased international by

So quarter. But as relates performance to in we very about it second right? what about saw the excited specifically, also pipelines,

So on call a specifically I there in citing ago, quarter believe was this some was that depletion that happened international. pipeline we that

finish. So the quarter year. was an strong into pipelines pulled were incredibly had that businesses that one fiscal of International fourth last

as optimism It's and first to gives into rebuilt what And is so great saw head see did second the we half. rebuild in the we during a pipelines news those The back were quarter. the need we that us also execution quarter pipelines.

international. very So excited about

to we am, an quarter, It there's And area area a continuing energy the in Ukraine. is Last still pipeline aging. we're the of all that see things, obvious is also tiny I the as is, There's optimistic for crisis. crisis said. still that I bit an still watch which the as it

remains a us, second albeit, so And build about international international? control very watch in pays in about item the I the and quarter. you asked for results think And the excited per pipeline

Danyal Hussain

in both control have be Yes. international for more the Bryan, subdued we tends than per pays directions. U.S. our pays what in to

had it pandemic, all. fall very the in growth early there. so much recovery, subsequent, at less And we And didn't

So that's continued. .

Don McGuire

Yes.

aspect, -- a So place quickly. you European have because means And don't just go to are government they that of maybe kind recover result, recover quickly as the and will, in don't things don't from. much social of if as very down the very so the programs that well they employment

So that's will, a of if you good continuity earnings. consistency, for

times when favor our in in are trying. works that -- -- these that's So

Operator

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

Tien-Tsin Huang

can can I I growth. the WSE half you to reposition on a that's if you hear case, PEO elaborate just start number good growth think implied think within that? Hope Maria, in were PEO, you you say volume from. heard second that's I'm the If trying to to looking me.

or the As outlook? get we from the quickly repositioning, year, to next how volume of benefit could look can there? growth better worse Or

Maria Black

was that The comment made really about bookings. I

And in bookings so to half. we are looking the reaccelerate back

it half. For the was a bit PEO, softer first as in mentioned,

well-positioned reacceleration, anticipate the of it of worksite we quarters. In don't in employee next terms couple and the the be that anticipate when we of reacceleration will growth, question the

a for happens, next lapping next record as that mentioned guidance the some record we into bookings. to retention, And in necessarily on remarks, we of as lapping -- reaccelerate But So are give growth lapping works we to year. well are year. employee we're position not believe positioned

Tien-Tsin Huang

the Perfect. or Got Retirement in then your change prepared you the just model Any there. Services, penetration it, it. across in if remarks. on outlook since And major And lines? there's on mentioned there update any the

Maria Black

Sure.

-- is upmarket. plans a So even it, and It growth. its do an that the it's the new It's the safe Run SMB Act have mandates. primarily mid-market targets. to talked and We about do we say little last has just we have But bit into week, business the if business. think across SECURE which take that and in XXX,XXX-ish outperforming great space, with of of the At that version and of all we this it is and state you nonetheless, context X.X the have SMB advantage of -- juncture, X.X XXX,XXX the clients offer. XXX,XXX

part to clients that we plan, be of single a that. about to kind over it in runway of growth So every I'm believe, suggest of retirement those coming for does a We that years. it because outperform about growth opportunity Run to That's targets. but one the capture reason continue were in And there's is of Services the could the we Retirement if and even think tremendous do you believe can bit its so it's not excited way.

Operator

from Samana Our with next comes Samad Jefferies. question

Samad Samana

assumptions to I that help are And of contribute? going be about much did the you wondering if wanted you us we just it that around assuming particularly out on this that what it should seasonally you ask how the was verification? how parts activity employment less there on do just think was Or understand will Just I lower? forward? verification. one the quarter. since mentioned, that Are called businesses the could you just think volume-based just employment you

Don McGuire

Okay.

let businesses X in talk prepared the So the me volume about we remarks. that referenced

an the down us. there the seeing headlines and are business enterprise more where focused us, are think the the in of that for press. seeing clients course, business was area, be business not we're most down. in big some one come But business, did very outsourcing. business correlates the internally it is that that a for And not recruitment big would we we first very is And that the in it's I That of The a is with something have it space. and Most upmarket. the of RPO of

the EV a the that business. for share market. comprehensive margin number significantly mortgage We Hence, related don't called a verification services it us. billion it's will, perspective perspective, you it's From mostly from we for $X our meaningful It's meaningful business. to more broader revenue of if us, because margin On the course, above-average employment and business, business out. is of part

back softness is, But that in look the in our those year. forecasts do mortgage forward we we've we're expectations we half you the expect sharing numbers today. as be reflected expectations the of to with And there the market and into those

Samad Samana

question And side. maybe Great. just rate then a on housekeeping the

assuming assuming it. we Are I'm come actually tenure just in When the forward the the the the -- short float revenue that's for gone gives company so up. outlook the guidance. of you has So end understand at curve

you're that to that. -- should is that it So sure levels and of at is -- about trying inter-quarter we're trying going that moves current tenure what get forward? the think now to I'm correct, it just should make assume how forecasting the we . the we guidance on we just

Don McGuire

Yes.

So we gave our program. we And last have borrowing come paper costs guidance increased, short-term have though our presented the some short-term long since particularly the in rates on quarter, rates and -- down, of since commercial rates. even mid

rates interest the in to and reason the So softening, those little bit increased client is rates mid you we and longer will, a forecast at of rates midpoint, and our the we're the reflect take if giving term. fund down interest borrowing the that the in

Danyal Hussain

for end asking about is curve, the what a thanks different peers. when what of year. even that into I baked than But baked the some because question you for we expectations is currently short outlook think know also take Samad, our slightly our into approach yield the Yes. market of

So longer a curve, the yield And even upside the you we of longer suggest -- Don's what mid Fed the rates, not that the raises decline. point, to if had guided. saw to at previously does necessarily end and actually

purchases our release last yield share incremental new this the so from, we quarter. in X.X% on I that declined X.X% and think, to And quarter earnings

So and less and or what short. yield curve, in in the we're mid getting in words, long less of more we the getting end the other we're expected

Operator

And comes America. with Kupferberg from our of question Bank last Jason

Jason Kupferberg

I question. on wanted second for a to come PEO and back Tien-Tsin's maybe on piggybacking

are Just talked I think some easier getting about you the growth we half think comps But differently come at in second going that year. some Analyst is the and Day. to of about like when revenue the was XX% the any that X%. provided about looks It fiscal reacceleration. guide you for you X%, thinking to then the as PEO? XX% And to medium-term

Maria Black

to aspirational here were our not medium-term of the in medium-term their nature, any guides guide. guide, So all and of medium-term we're somewhat changes the making sitting today

It it I just been because I important think is has reminder, a demand think, again, when incredibly decelerated year-on-year had PEO earlier just still was what point. said I it call, on we but wasn't the the second still we outlook, bit it thought. growth. think the quarter. an strong I a through the about Technically The for earlier expected, is PEO. It growing than nicely and

about we so back the kind PEO, to do we And expect when reaccelerate. of the think bookings half of

year. But way, in employees to coming into I do so retention compares the quarters, next we're lap even expect not but we the we -- was to well think on As the by big healthy. mentioned, as positioned accelerate piece works the

it's the byproduct will. you I with if And seen some in that is we lot in I've really business. years spent a in in It's which as ACA just that from experienced nothing really the of been this right than strangeness is not the decade. the where of effects abnormal, lingering during line some Retention pandemic, that last that of business. different

is business say and opportunity well on And tough so its as as in to wanted I we would be, high just very not again, we tough us. to excited And it be what not positioned that compares. high as long-term feel healthy, for healthy, accelerate we wanted is, about compares. as to is is bookings Retention it on demand healthy, growth just

Don McGuire

Yes.

expecting Sorry. we single-digit growth And Day, at said employees. we the high that were time, at same Investor average worksite in remember,

much on committed very and pretty . track still that we're think I much So to that.

Jason Kupferberg

Appreciate Okay. that.

obviously, of so in up the some we recent labor to on months. temp control per in your helpful. follow potential side, labor been have seen would any on about the I'm with wanted guide But some -- be you just the market relative market views kind pays upticked lag? conditions. there. wondering material there's the labor business And declines market, Just think temp how to there you broader guys Just

Danyal Hussain

think... Jason, I Yes.

Don McGuire

will let can me color. Maybe add Sorry, start. -- some I Danny

-- levels compared to we positions, healthy. some of think levels. et the certainly still look cetera, they look open It are be but at to declining, job the the at look report, so still at -- seem we those healthy I JOLTS I leading the mean, at remain positions is the pre-pandemic until indicators postings,

there's to I So an saw what I be some still pre-pandemic. at. think would And indicator look we we they think before that back there get room

at to on it. still So healthy. pretty guess be I to in things focused it. We're continue But time, feel pay point this attention to we'll

Danyal Hussain

are one Jason, of many to indicators employment at. rate. leading given exactly things And look It's that where Yes. sure, X.X% we point. that with we and are for slowing, unemployment

question get is, we it's at of more the levels a expect less whether slow to or is next But several to outcome. healthy of monthly growth type these not that's a over So think the jobs months, the question still growth assumed. I very that employment

think environment I that's today. characterize would overall so the how And we

Operator

Mehta Northcoast Kartik question, one have Research. that time comes more with question for and We from

Kartik Mehta

just Don, at that is PEO look you strong comparisons a competition are the bit and Could that this reposition was the in business the that a is you or as -- the seeing to any you be difficult. are seeing? the little business? Maria need so of you're more part business business Maybe and maybe Or

Maria Black

so was business the think I strong.

do retention. not look seeing small -- well the or faster. on XX-XX in as booking kind to meaningful its we plan think PEO for see return see of . deceleration. again, on well a is change it's the we're the we switching, that very trade, terms that split Again, results actually competitive landscape. business where a We as I gets we at We or in piece as change but between there that from, win do to Certainly, leave. happened look impact as coming competitive clients of And PEO in a not clients compares at where of overall were that and business difficult. we upgrades balance not exists. the side It rates new landscape the

Kartik Mehta

customers they indicators report, see saw maybe in the type X, if you that? might at for And Don, the then of look to maybe to have I wondering, are what and we and and you're I to leading if what statistics. and employees? demand about JOLTS Don know talked you you And assume kind months you But that those the I'm -- ago. have of of Are you other able X statistics? so, lots talking And Danny, you able do compare of type you that see about

Don McGuire

I mean, look pays the growth. Yes. control per that, way think I we the at through Kartik, is

went we that optimistic bit has so from and gone And a to growth in little to X% as more be become we've as on. flatter we a down time were X% although looking the on QX half, bit in back

take kind installed look think what the area that and our base. key where of be we demand I would client So the with is a see

Danyal Hussain

Yes.

Kartik, have beyond earlier. recruitment the that one solutions outsourcing some Beyond do about Don that, recruitment spoke we

the that so would clients And And back, to on very JOLTS, have, data example, job for the trends postings look similar. we that our track have. typically would were if of be you number total

where clearly, in be that Now an environment said, you job they pull have could then people decide to them. and postings

have we pays leading how at indicator live a So out. is, control that hard how the on of But accurate is, time, as say. it's great that to points Don per same data

but with job healthy. signs know are still bigger of The and postings picture added deceleration, week-to-week. temp, there people how healthy. is That's the precision healthy. So are being we are layoffs Granted many some

Operator

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

Maria Black

you your all you on of you, Thank today thank the phone Michelle, and questions. to thoughtful for

the As we're how second you first excited our very pleased the our heard about today, updated guidance. half, from for tone with against positioned half

work associates to solving appropriate doing work into in world think for value the of everything HCM. are every meaningful that me thank out And the that Again, do we for our clients, the workers and every I of it'd bringing be about and XX,XXX-plus world the of world that, work. clients all for day day there with that into is for their

for the thank and speaking certainly to all all so support your soon. and continued to much. we the you updated Thanks it forward So Thanks your investors We you to support. you appreciate again keeping and with associates. analysts the and look

Operator

This concludes the program.

Everyone, disconnect. now great a may day. You have

Automatic Data Processing (ADP) 25 Jan 232023 Q2 Earnings call transcript