ADP - Earnings call transcript Q2 2025 | Automatic Data Processing, Inc.

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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 2025 Earnings Call. I would like to inform you that this conference is being recorded. [Operator Instructions] I will now turn the conference over to Matt Keating, Vice President, Investor Relations. ahead. go Please

Matthew Keating

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

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

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

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

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

it turn now I'll over Maria. to

Maria Black

for and thank Thank us. joining you, you, Matt, everyone,

Before results, I'd wildfires take impacted acknowledge to I cover to by devastating Angeles. Los in our a those the moment like

to go our associates, and everyone community out touched situation. by hearts Our members this strategic clients,

To significant during second Directors the dividend. XXth milestone When which raised highlight to in the we quarterly of begin, increase our approved ADP's November, achieved Board to XX% it marked like quarter. a our I'd in a dividend consecutive year

across kings, a business dividend ability a more of cycles. is now be or and increases. ADP's elite number We of included time small innovate to to over enduring distinction proud dividend traded an testament This are of and to with our U.S. economic among publicly years consecutive XX model companies group

XX. to of take of as Investor and and sharing Day, will accomplishment importantly, more HR place we've new which and June headed where forward innovation. more our our where workforce era this a global been at We leader a on look we're XXXX and embrace about We role technology insight builder

This growth, and we across included of reported X% revenue These margin morning, results adjusted and Employer our expansion results segments. strength quarter PEO XX% growth. points that basis EBIT XX EPS strong Services second adjusted reflected

with delivered and strategic Services before bookings for well an Employer progress enterprise providing new as financial We our with our Growth compliance priorities. small offerings. business made across the fiscal some begin businesses across solid record was I'll business update quarter. additional HR second notably strong as our highlights outsourcing, volume on

and of a this year, a With up the the pipeline half from last new that backdrop strong time second year. continued to forward look healthy is demand business we

retention prior expectations. again Employer compared slightly the Services declined to year, our once modestly but exceeded

very We strong overall client continue environment and to from a levels. high business benefit satisfaction

in fiscal our X% Services high slightly In increased QX. growth reached at client Employer albeit continue The in U.S. first second hire, QX, in half quarter the year. satisfaction fact, through a control market slower and of and clients the a our levels to our remains from pace. strong, per pays decelerating all-time new X% labor the

X margin strong of growth. driven bookings faster pass-through new revenue X% growth PEO by business Finally, and was PEO

considerable Now where our delivered progress. to quarter let's another turn of we strategic priorities,

HR Cash industry-leading During small platform, business solutions, management and together small business receivables the a payables strategic second quarter, partnership and Clover, its RUN, that cloud-based platform, with solution. point-of-sale we brings Fiserv's business specifically management Fiserv announced payroll and with accounts leading our Central, and its Flow

power the solution, to to are of businesses business the the mission U.S. management partner Clover full been combining an businesses ADP's the Helping this integrated this that U.S.-based economy. in platform. offer small will access Through goal thrive drive millions Fiserv RUN we and X, since support Fiserv with small and small to partnership, small all-in-one ADP businesses of to advance and has day excited

to available be will their Central mutual Flow cash efficiently. enabling RUN to Cash our flow clients, addition, manage more customers In

flow money out respective it the or integrated to businesses make they managing integrated client manage our for to solutions in initiated easier and is will during paying to mutual referrals ever quarter, payroll. of coming into than closely We offerings are the their to deliver our bills working selling small second of solution customers, team These business, months. whether and the the

and mid-October, WorkForce is which Software acquisition, line with Our closed in in progressing expectations. well

time And and We scheduling with HCM teams are platforms. management associates join and WorkForce integrate Software's to to have our working tools key attendance, ADP. thrilled ADP WorkForce are absence Software's

in happens, Software QX, our the offering workforce it solutions. new in well solutions. existing delivering our healthy management team business experienced While Software And WorkForce activity as on as momentum we best-in-class its across WorkForce maintaining focused is other new

to started anticipated validate already have we addition, the new see that business from opportunities the In combination. growth

Software's wide fit better For example, of solutions are enterprise-focused, to and a in a range clients, for WorkForce verticals win us industry-specific strong compete and geographies. allowing industry

solution. proposition service in We global is suite opportunity solutions accelerate full Similarly, to the a solution. [indiscernible] to positioned our WorkForce Software WorkForce looking a excitement workforce we in provide are for payroll value seeing is confident payroll time And remain clients with growth our of Software, and management clients and basis. ADP ADP offer to With HCM opportunities this enterprise marketplace. generating and uniquely HR HR, in the to

the quarter increased quarter. Lyric, in ADP interest volumes flexible, Following pipeline strong HCM global business intelligent booking during the ended year. to new marketplace human-centric significantly again, to Lyric's compared platform, the and its the generate continued business new the successful product up our introduction last and of second

reach The the user experience full significant personnel management acclaimed management see went capitalize opportunity. Since Midwest and international and to One Lyric a nearly in we a broad operates live pleased talent very X HR, client zoo with its outcome. golf payroll including platform, recruiting a cutting-edge focused and is and payroll with It remain for expanding the parks, on the its client Lyric to benefits, global and processes. already XX company we nationally time, large management what courses. on selected a on Lyric simplify that started activities is that recreation QX global in is suite, as

a efforts other over Don, to want continue all every is day. to I record to do Thank express moment for call to dedication contribute inspires for take to gratitude for and I client turn and our It their you that these each that again commitment my unyielding clients. to our clients each satisfaction our the Their ADP, our associates me scores. for and Before work. for hard you to

continue for even momentum strive greater together. on Let's build our Don? to and success

Don McGuire

update results by everyone. you, and fiscal Thank morning, providing our and color outlook. more our XXXX good then start I'll on some second Maria, quarter

second begin outlook. reported X% segment an Employer and and results Let basis our revenue with Services currency on me increased in the X% ES constant on quarter. organic a

ES X% maintaining year, mentioned, to growth growth our business Maria demand to we was As guidance. With new healthy solid. X% HCM last a backdrop and are new full bookings pipeline compared business higher year

of X% declined fiscal XX growth ES expectations, full retention X% X% slightly points our maintaining slightly year. ES XXXX. and for for our pays growth forecast we below for modest are per the in QX, XX in but a control to continue forecast basis to we decline to of came

anticipated we average balances. Client more client funds than stronger interest fund revenue mainly growth driven by increased by in

recent increase for increasing year, million. the FX investment maintaining extended funds For forecast strategy X% we headwinds our X%. year ES to Despite more funds are client the growth from and client revenue by revenue our interest forecast, than revenue to for the $XX we impact offsetting outlook interest our are full our of net full

second in quarter, points ES the increased revenue interest client funds reflecting XX margin basis Our leverage and operating growth.

to XX basis ES We points increasing continue to full forecast year. for the XX margin

growth of to X% strong year With accelerating of healthy we new X%. slightly wage margin PEO. are state forecast PEO timing new average growth business unemployment worksite X% bookings, maintaining growth average of Moving X full to pass-through employee exceeded growth, insurance worksite employee revenue. from for growth X% revenue expectations. and X% business levels, our and Revenue benefited the growth to Revenue activity the and X% continued of growth of our

grow decreased the to impacted higher control revenue increase ES and and in slower growth the past basis an compensation unemployment expect worker PEO it PEO in growth to X XXX control pays but QX, quarter, [indiscernible] per state we for stabilized by year. growth full than benefits in insurance margin margin continue points slightly per pays costs.

We basis for decrease XX continue full and year. points between PEO XX to to expect margin the

basis it points. we EBIT together, are XXXX XX growth for and of Putting X% revenue consolidated all maintaining outlook to of our to XX expansion margin fiscal adjusted X%

to expect tax year rate XX%. of continue effective a full around We

to Our growth fiscal EPS forecast is unchanged. X% adjusted of XXXX X% also

There are matters highlight. I to X like would cadence

the revenue likewise calendar. timing PEO mentioned First, we insurance state some QX related in of to ES unemployment revenue, had our segment in favorable timing and we the

We rates and as revenue a lower growth impact in QX interest to QX. result growth as trends expect total before the these and of strengthening factors the in reaccelerate deceleration dollar well in in short-term both ES U.S.

Second, be we expansion the the expenses to integration revenue lower growth and the than adjusted in timing EPS EBIT well to associated expect as reflect lower growth WorkForce of margin adjusted in QX QX with Software as acquisition.

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

Operator

comes Samad Jefferies. with Samana question first from Our Instructions] [Operator

Samad Samana

the team. and see last end to year strong Great calendar Maria year, the to the

maybe a between just exciting just Is lot a help partnership, that. the is co-development of any question ISV-driven associated multi-parter, as more to there congrats referral that about And obviously an of it's know Is should this the on Fiserv there's So I the organizations? going a within? news. a think us product? the on that's first see beginning I there share And guess revenue we on be of kind but there. strategy? X

Maria Black

pleased as relationship, you finish, the Yes, on enter about strong we're excited to respect the into it. the accolades for well sure. With Thank relationship. incredibly Fiserv certainly this to

are to X think serving believed market business always X about business our business. in being have that making companies easier organization, that small the in navigate you and for in anchored are owner there small If things

coming clients real will. if together, in the to So companies really great coming things are you real real X believe for I imagine together what world, you great distribution solve X arms if

a this we That's in So to and we've what are, answer point, to your back done question, forth. relationship referral date. at

But right the about of products we as think integration term. you're exactly long

RUN versa. of Clover embedded vice the and will so And offering be inside

Clover inside RUN. will be of embedded So

-- what to that we're from a and ability the is if to technology what you on joint we so And is side what come, have will. working offering really

thus so leads arms, we're what great X back between But the to seeing forth really the far companies. and we're respect with far, encouraged distribution passing by

this also you the I relationships, specifically believe beginning go we and think it through partners, it We of partnerships. of be strength banks, market, at the is in great great channel to through in that how channel asked answer in Fiserv. channel my today, but Certainly believe our with more be the our think distribution, ecosystem. it the and be, downmarket accountant strength of be we would the now I

Samad Samana

Great. And follow-up. one then maybe just

there's side, know on On focus of lot rebranding with into the enterprise Lyric, been that I that. a the

it last sounded good quarter. You very about

You called enterprise now? for how And side it Are this the out to should business? fair of seeing kind forecast the think maybe of -- is or of that? bookings this of what's Is bookings a in we about this it clear year impact the say inflection you the built quarter. from

Maria Black

Sure.

our it And and clear anchored name just HCM intelligence the the really human-centric in flexibility, solution. well And Lyric really So for is it is is everyone. Next quick design. Lyric for real that resonating is marketplace. of in new Gen

it's believe really product we offering. a So strong

seeing well as with I pipeline believe that the seeing based respect we're to the on building. client market what adds, is

do pipeline Lyric year the incredibly perspective. think from growth new to contribute We to this strong our bookings expect business year-on-year. I is a

of that days, take for with it is it enterprise clients, overall global it really the so we're in will the early seeing dent and the and some time again, receptivity and scale in organization. is excited terms resonating But But the we're to financials to offering market. of our still the

Operator

Our next Bryan Bergin Cowen. from comes with question TD

Bryan Bergin

post-U.S. the client that's election, demand, out on did the anything segment international? see bookings or curious calling question to worth so you And specifically Can turn in you calendar progressed changes note how good it's as you that's any size? on the of a here. hear continuation First just on the U.S. I'm what in across double-click healthy backdrop versus

Maria Black

Sure, Bryan.

good feel We HCM broad-based. demand. It's strong. is overall demand the about So

having also and benefit clearly sales We from great organization. marketing a

navigating downmarket still about. still the owners as companies, the they're I buying. we in hiring, downmarket, various business just They're across would say still they're being small talked segments

There are a of couple pockets.

like it's standpoint. things a little which on eye watchful will, pre-pandemic a bit a keeping we're think pressure from formations, I seems have elevated business still fiscal an level, of this year. new at you if to But

outsourcing. to HR I that In there. are that mid-market, strength for mentioned us excited the that in a space. remarks. in Really see the seeing prepared that's mid-market we And extension in the differentiation

about the talked the the we've quarters mid-market we've made Workforce over into then product, record NPS, the And retention. investments record Now, our

have we to segment. across so meet And story a mid-market the demand nice that mid-market

with I I eye watchful tend say in be a at don't to backdrops. keeping would respect and the [indiscernible] think upmarket, we uncertainty alarming. always see to the global every space and just we're quarter, that point, economic this anything given But

think, speaking, I generally feel strength the know, and business. the And broad-based good we back half we we're half. into really pipeline as heading a But about back all

a against. have lot to We execute

the about changed. that's asked new administration anything You and

good a new is of a ADP. But as not I the think or it's for administration. there result to lot demand is be whether to we're seeing call and news too activity, of early good change change the a seems

them As companies compliant. there stay help navigate to change, we're

looking to be undoubtedly through a of to And so clients our seems bit we're what helping quite change. forward sort

Bryan Bergin

for Yes, sure.

that Appreciate on And detail. 'XX outlook all the Okay. [indiscernible] then here.

appreciate So clarifications. cadence Don, the

when affirmed the here from thinking comfort any FX about think indications versus half? the outlook, How levels it of just relates Your be range through upside of second EPS within we elevated curve as to you we that as potential headwinds EPS potential the as move remains the kind should range strength? you about kind on dollar on growth,

Don McGuire

Bryan. Yes,

say daily kick balances. the is the largest to far taxes highest as think that's average of particularly quarter, really balance start on where tend which by I'd you I are federal third right the to So headwinds end. the touched the some in us there -- sorry, that and in slowdown. it But or again time new at also at state the It's have see taxes causing FX we the our year, that,

funds are short. those those year-on-year. or XXX short-term basis rates down all are funds of And most points And

pressure before put QX what's rebounds in QX. that's more on into particular So it

result the and various So I the investment tax are in headwinds short of a at think the kick that's the grief FX the quarter the causing of some year. the nature third course, calendar It's we of of the start in trade-off. portfolio as then, taxes

Bryan Bergin

Okay.

And increases. Okay. of years congrats XX on Appreciate dividend the that.

Maria Black

Thank you.

Operator

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

Ramsey El-Assal

of and help drivers for a Can Don, decelerate would timing-related that slower out you comment I why you just in the implied implied growth way it the a the back better bit further you've the should there PEO on issues. half? of some little know revenue sort understand will. parse were that us us

Don McGuire

Well, SUI. also QX. we forward the pull about certainly SUI have into some the bit We in prepared of talked a little the remarks

So that really end Year's when the of opposed processed holiday. Day fell way People New to in the it QX. did back at the as was happening just calendar with the QX

that it as the So SUI some into of quarter third. pulled the letting the second to fall opposed low-margin into

our And then, in renewals course, of we are time.

a be bit in So they little be -- are to growth at control as were PEO they or per pays ES. continue Pays to in control said, we're there looking that. per we expect in we than -- slower

saying we to I'm ES did control X% round want we down. in clarify round rounded up. though growth. this Do didn't to We And that per pays down yes, when

a So control pays slower was but still growth per above expected, rate. bit little than the it X% was

I the the are primary in really of PEO half. drivers So growth the back slowing think what's those

Ramsey El-Assal

it. Got

Paychex the you or Paycor deals? environment any do a appetite follow-up context in your see the changes M&A for acquisition, Okay. me. the of then to In And do in

Don McGuire

that really Yes. guess changed. haven't I views on say I'd our M&A

haven't has to the looked incredible encumbrance There's things doing at, I been industry. think really thought still of we over the environment anything. fragmentation us that regulatory in amount we've really years, the an

our our to to that acquire going that to sure things keep need -- I and So to we're complement we don't principles. complement certainly, continue make offerings But We or we them. look. think complicate

getting contributed should expect done we've tuck-ins see you and very years, expect our -- us, important mean to I over cetera. to they we for us as over network, see some et to control are better the

going us that much we've in potential result there's any some regulation on M&A don't see I a new those would seeing But had to of based stance may date. on to forward. different be think than that You going changes

Operator

with comes Faucette next from Our Morgan question James Stanley.

James Faucette

quarter, around an ask degradation, a about Last business attributable that hiring off point? the assumption of in Great. at we move up flagged And retention. specifically kind -- you small, medium-sized Are medium-sized see levels. quickly quarter for you it specifically I little retention but small, latter and on the half all? of pick uptick levels want what's wasn't broad-based instead half the and bankruptcies really saw again? the kind assumption bit the in you is to back rather a that to peak back hiring bankruptcies in did of for What will seeing

Maria Black

Yes. back half. assumption, James, That the the in is

again, noticed, business. is did biggest that does our beating results. you me well very business happy see as as that That on retention. owners makes pleased retention, piece beat So ultimately, that are I'm on we modestly, modestly if them small more even to in as mean retention, staying because we're for the

a We of degradation, bit you little did a will, see the if in downmarket.

we not first declined there. It in the way to do the in believe beat. We're continue almost quarter. declined. quarter, we That It second normalized. declined we're said, the So modestly modestly all quite

one of But our levels, keep I'm prudent in stay all retention businesses business. So seeing, based I'm our we we really is. been fact small as to sure that across the optimistic, on guide specifically to are, what hope it's we're believe segments, that retention each at record as that we've

James Faucette

machine and Appreciate do Great. bit some status a a wanted to of then of learning-driven on And initiatives. little AI I that. your check

kind give your can flows client as us initiatives a may of sales topic. or productivity projects. with efforts on. could impacting on you service sales And on I or of you to You been very and you guys wondering But AI an AI if know provide any retention how front-footed have that of gen want some if have metric just examples and update I'm you that And are ebbs your that. efficiency other any touch always

Maria Black

Yes, sure.

and to we seeing. generative overall to in strategy, approach. respect the are our So on we're I'll on laser-focused chime results here But Don AI start, I our certainly welcome that with

which call way ADP in more our call we That's just into and remind everybody, and it the is And what specific products. it, kind buckets, Assist. to level our been X, our for thinking putting we've of That's about making generative set that really better AI usable is clients. products

It's putting service organization. generative AI into our

of that but as part And of think ADP So James, that's answers the assist, that that service and Assist kind agent your question around of nature. of specifically, things umbrella. overall

things the call past impact like of we've meaningful [indiscernible] things Some making about spoken in already are summarization. the that

cited that up but and of lots we're not before I per which think sound minute shading off you everybody that per a it lots exciting calls, pretty I take that minute quickly. a to may call, call, when adds

impact So relates it of we Other tools. things past, those on continue in make we've as transformation to a cited implementation. the some digital meaningful to

the small anchored is new organization are clients business tools AI. using it And onboarding end-to-end so levels relates in at [indiscernible] generative really to record as that

kind the So service that's of side.

quickly the this I decades. go-to-market. way, By about I'd We've topic. could for argue on modernization X and Switching and a effort, the sales to gears been undergoing go on really

sellers. Think sales have that stacks We likes to enable modernization our meaningful the tech most the best-in-class of of exist. technology one

about that things opportunity we've the is talked prioritization. of Some

sales So putting into the right the to of the value drive right at right the about in time lead seller process. think front

rapid We're doing planning. like things pre-call

should helping and pull are olden that certain These MapQuest the up what have my to more back sellers to where effective client. I to their me exist calls. all used days to are takes this to now say become that on our try study on tools a sales I everything or Internet So

technology, game as our the modernization you see of quantify balance we it's sales. and certainly, into and that And really it's way sales that more between invest the productivity. end is it various really -- But this these pieces driving there

that tenure had based sales right we lift seeing on the productivity natural in in just we're a our So organization. now

bringing we're So if in tenure on you existing imagine, associates, also we're the sales building force. new as

are So able more associates existing more associates productive. become new productive, to and to also become are able

in anchored sales anchored tools of output more and of A Part in And of we're lot long-term is that that that in. more that sales is investing is the tenure. these productivity.

lot, but to a offer, add said was I I'll wanted you to anything that. if think I Don, there So

Don McGuire

these hands, the are No, see associates' have seeing [indiscernible], of that results. I'd efficiency but there's when tools we many would even tools. just have add still we to and productivity, I good that many And say expect get good we the they to more but positive in still more our

those productivity and So things margin. the hopefully, we we'll improvement, reflected see watch in the

made in have course, Of tools we some the minor investments themselves.

line the to term term, longer we're seeing, very bottom results everything but we're from impact positive not certainly the and over So short everything is doing. very, going be

Operator

Marcon with next Our Mark Baird. question comes from

Mark Marcon

strong Congratulations of organization. years XX the on whole the obviously, for end -- the the to calendar year and

Like lower pretty regards meaningful also end years, side, do some sounds On I it to be X Now. promising. it forward the And we clients, could it on if be RUN? the beyond Fiserv relevant Clover, envision could Because Workforce partnership really you the above be? think for how or strategic and working? of expanded with X might and it fast How

how wondering us just I'm feel a you wondering early for it's you're thinking days, I So but if can about that. that. give know

Maria Black

Mark. first the the Sure, for on foremost, you and accolades And thank XX years.

all interest you've that to You've the years, big this us over and our of strategy. appreciate along the been in help a interest certainly I so go-forward had part

I hit on the head. nail think the you

market today, go. how sorts and can visions we channels. Again, go through is we far that We it primarily downmarket just if think you have all and of about ecosystem to how plans

it. specific and services channels banks, us. This CPAs, be I channel it certainly Fiserv. as in merchant we That channels, or we've around distribute past for how why the in such cited those POS engaged we be meaningful believe through think it through could numbers channels we've a is be

think I channel about that we forward that way when the I similarly a today. And to to engines coming great fast value banks and really great speak and I great the that I X very speak small the -- to again, products, to years, the overall if companies X, we into to space. So accountants distribution business drive it's together was think

the be bit Could is little determined. to a think it go beyond answer small business? I

something I that traction see we'll think as we that's the challenge the in downmarket, to ourselves. continue

simple I that. -- very be Listen, me. is it's makes so is me, -- guiding opportunity upmarket, it it always and have up, exciting. real client. all it To about it's And as an be about that's we small, to solve principle mid, be for if the I we're the And challenges, business what owners, think Fiserv well, it

to easier make So do in we're business, anything we here can being to to help. navigate it

Mark Marcon

great. it like going to everything is on Software, That's according sounds WorkForce And then plan.

with next As regards think it the up fiscal meaningful be to that being through fiscal could integrated end upmarket? think? 'XX, the how And how will by year, well you for you --

Maria Black

Mark. Sure,

working actively a that from right are we So perspective now. through plan

week, is to in. pleased on Amazing, last actually say days. XXX celebrated fun. track. So We XXX flies when I'm having But everything time days just we you're rounded

we've And into have the Software We that along. milestones pleased in ADP days at how folded family. the XXX see first welcome Really the to done this come we've accomplished is them associates. WorkForce juncture, what

it's really far, there, in thus the a look at go-to taking market. And

talked So set they quarter, a have last as about of we meaningful clients.

our ensure big and management consistently market go base winning comparing side, labor and to ability client pipeline, and really piece that's a base time the And we're that of and the together look to at focus. on we workforce client the their been that software so to as

really working the is pieces. of next And then through imagine, integration as you set can the

in management in this offering. to also space as Lyric opportunity us from necessarily is a also global done. the together big workforce bring we is in to but but that exactly really of the we're the this what to a when, spot enterprise product about going mean space, So you we're that is declare in [indiscernible] piece being the have with work the by an space, And excited

Mark Marcon

Terrific. leave it Got tons Congratulations of questions, I'll again. there. but

Maria Black

Thanks, Mark.

Operator

Bank. next Keane comes Our question Bryan with Deutsche from

Bryan Keane

Congrats on the solid results.

the on Just Fiserv a clarification partnership.

Just onetime on both percentage do work fee? relationship that curious a on it works Is economics, Is how a X companies? between economics Just it sales on the a exactly fee? the how recurring as the sides. of

Maria Black

we answer don't sense I know that we orchestrated how in both. want broad get of to exactly the it, So the into a is specifics but

referral piece of time to share market a together. us is proposition make go it. both to also an financial There's really for for revenue over that to the drive there us to this So accretive

Bryan Keane

Okay. growth, and the follow-up, just kind you'll do pricing kind That's be for to new helpful. in and client what environment? the new And key as a season? able season just thinking you selling think pricing targets of is about What then of selling yield get

Don McGuire

There's seeing continues we're always think much don't unusual. competitive happening. is I Bryan, The anything Yes, environment to pretty be Nothing promotions. the same.

things other were are they promotions, cetera. as previously. feeling have the et But same promotions, folks have We

not unusual. So seeing anything

with XXX got for said, clients, this we but XX XXX price existing of points about points points and we're and terms XXX looking during heavy basis years we of -- XXX is year, the inflation. as In historically, which targeting clients are staying retention pretty as attainable, the our us is shows. more rate couple But we've of -- increases than the than got basis less the

we So that's for us. think achievable something it's

Operator

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

Jason Kupferberg

sound how to continues The that know at guide was you about to tracking you're on is qualitatively talk upbeat. for I just quite this hoping to there I least versus to the wanted I tone could X%. last at X% year. year year guidance unchanged start bookings. the

than or was this it whether time wondering not higher Just year? the at visibility is on year full bookings last the now

Maria Black

pipeline to that is respect with the to question Perhaps Yes. best way answer year-on-year.

overall. So the pipelines are up are shape in They year-on-year. good

when through the a you're see how good sales pipelines, and longevity about talk we we right, motions. international as deal term, a deal pipelines able moving actually Just to feel really to mid-market is that's And a of the clarify, about year-on-year.

In handled are the new PEO? going really on? things are many downmarket talk activity. How How pipelines, many instead we in being like about RFPs we appointments of our

about all all I half. activities. respect back to as half RFPs. good about feel back heading We get feel relates good it company would done, the we of I we pipelines execution We about we earlier, feel good say ADP, into So but is the year-on-year. to and it position still the year-on-year to are across feel again, sales. a a What the lot mentioned our good We across, with have

Jason Kupferberg

Understood.

maybe finer be just margin QX, you half pieces we here of all the how a so can about cadence and we've in one put point revenue And parts growth got thinking Appreciate should the year. the for calibrated? maybe Okay. versus Don. the just on moving back that But QX

Don McGuire

Yes.

reiterate, I of think order I'll -- importance. to just do the these So in

the FX, a margin #X, have is [indiscernible] through and think course, a will impact. impact, of I having fall which,

The going is a CFI, the Software. of drop of is integration of how third with the quarter, point challenge really WorkForce course, with portfolio in course, here basis And and the much short in given of XXX the to respect bit getting we're also the position. expenses all

the a out goodwill see you'll -- and breakdown see breakout very of all the of all XX-Q, cetera. all now the the also items I'll the detailed when et and that intangibles, call you items the that of

the insight to get into over able clear some a that's going to be cetera, and et have look years. of amortization view So very how times, coming

QX, certainly, faster but more us growth going our growth to the back year. full bringing QX, bit QX little accelerate reiterated in some And we're bit then QX, for into when a softness more, in But those growth factors. a slower you see of in a guidance get result we'll to see as

Operator

question next Wolfe Scott Research. Wurtzel with comes Our from

Scott Wurtzel

to wanted the start I segment. on PEO

out clients plan. called into had dynamics benefit maybe peers with your opting lower-cost of One some

recently? benefits So enrollment been in any seeing you've just behavior wondering changes if

Maria Black

Scott. really, not So

I in the of the purposes, season actually think year half back for into heading renewal our here our our we're fiscal in PEO.

bit thus if not not to So a will, you be determined, but really far.

I think the to some all somewhat remind of everybody, structured just differently. PEOs, we're

Some offerings, have offerings. ASO us of HRO

have fund health Some ways of different us plans. we our that

the health PEO, we're As fully ADP insured you on know, side. the TotalSource,

we've out don't in really behaviors the so called and match always And past. not each the swings those other,

offer that that and as I expect results it It has We well offering. PEO. from a do have as mentioned HR an contributed bookings perspective, earlier. from outsourcing the we great both

both, So the think don't see I really see forth. we swings and back and strength we across

Scott Wurtzel

a That's to just you. your any per in client expectations, that follow-up, then helpful. was control Got the specific softer base? of relative pays pockets on growth Don, And as your

Don McGuire

regions not specific It country, was cetera. of et industries was -- pretty Pretty It broad-based. or no the No. broad-based.

Operator

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

Tien-Tsin Huang

So a couple of quarters of really strong pipeline.

quality. you've I'm in how mentioned And shape -- if you curious this, second getting I deal and the think sizes but deal don't know I the curious, half? awards heard the just see the larger general? in timely do of are Just pipeline I

Maria Black

sizes I consistent. on would deals timing and is relatively say deal

And last so normal. years several the the old think back of or normal I new of couple about we've times guess, talked kind the I over we're to,

similar move motions they cycles pandemic. the deal prior very through to think I So to how operated

think you sales of don't impact suggest every impact not had year hear strangeness that both kind on if from interesting the us, interesting revenue, then line. side you That's Certainly, now to that also when and in this holidays to fell about cross That the timing. a deals differently.

But lumpy deals well. as are listen, large sometimes

that it's the And And seem usually be so we do. similar I to pre-pandemic. through really the things generally think they motions say, to moving would about speaking, how business

Tien-Tsin Huang

hear to it. Glad

Just some side, Love thoughts we've seen don't mid-market I your invest an on trend? that Maria, like ADP's that. just model. do on see the you solutions. endorsement in SMB like feel as a of Feels the consolidation I players know,

Maria Black

copies Well, first than no, the all somebody consolidation you're -- So say referencing. the take the thanks. know form obviously when kidding I I'll you, better of -- listen, flattery first, that aside, that. yes, There's best I'll -- right? nothing is

for having a of validate continues shine. ADP it to approach. depth breadth and segment I The will end, broad-based our think

fared to X are I that consolidating, we players them. against both of respect well with the would say

we that to [indiscernible] both from for will expect trade bit of against maybe knows, We presents continue the of a them. us. Who an to opportunity of balance be itself well fare

in stands, each But as segments. the the best-in-class position we really of and about strong I platforms we the have think our products it are that of

of offers segments. each RUN And with Lyric in solutions Software really in now the about great the we So Now feel outsourcing one and mid-market WorkForce across that coming of offering the have Workforce offering we the downmarket, and inclusive these the HR together, the PEO.

Operator

Pete Citi. comes question next with from Our Christiansen

Peter Christiansen

BXB in little It bit management good thoughts your stuff even Maria, ADP. a for talk seems adjacency of of treasury real like Lot perhaps term solutions. wanted I [indiscernible] payments, about natural here. longer to a the adjacency on

years ADP established ADP know I couple a of Trust ago. Company

about do payroll. cross-border with the how that on think integrations couple with you a wondering Just longer We've term? seen other even some side companies,

if TAM Just see opportunity this ADP. you curious expansion longer-term a as for real emerging

Maria Black

certainly, that And the been looked, before excited in future we're about think at We've I our offer -- of take various strategy. Day lot things Investor we've By think CFO and about Pete. office as an join the we way, because way, I'll referencing, by to you're talk we've that to the us of the our before. Sure, the pretty Yes. right? looked a the

this to ability really adjacency think through full other even standpoint. solve even means real go said into the perhaps we that I solve, or I partnership perhaps those around client to together what lot. a putting if at or which deeper the I'll going to have which Fiserv, we are with from strategic think of I that or a things with always we're center entering is ownership that integration learn come companies to back are ownership shared we're the batting problems, earlier, partnership

for things of So by That's unveil, the about the suggest excited I some some we're to thinking more suppose there's pretty but for come. share not, to future way, giant ADP. the we're to that

the thinking has shared certainly, November to and couple Day we've actually things has And of a changed, in some overall the of since done haven't that of business about certainly over the we evolve how industry We continues and 'XX. an changed as years. both the well. are last But Investor lot

of more come, mind but for Pete, certainly top So to us always.

Operator

Our with comes next question UBS. Kevin from McVeigh

Kevin McVeigh

Great.

of takes ES drives I overall? back about with business in maybe the or reacceleration around in puts as Don, specifically half the opposed Any think, reacceleration to trends the what on that you and QX talked QX. kind

Don McGuire

Yes.

think I around -- it is around ES predominantly.

big the where that of the is difference think don't have QX. short I largest course, interest. The have client and [indiscernible] in is portfolio, we QX, the we

significant the in QX than I interest somewhat -- the QX. piece short-term So be will less think that's that to what's they puzzle. rates of of are And the a so impact going be is to going in

But that days be than part WorkForce detail in some the do There's Software, have it. really of some that. even in quarter in it's this we where coming heavier other there's the though is QX fourth early are the there expenses about still of than heavier will The really more expenses XXX so in that's quarter. days, we integration nothing

Kevin McVeigh

And us, on the any retention. quarter helpful. QX or the rather, have quarter would quick the thoughts That's retention? start. then just typically, know just January seasonal remind on what impact most there's some seasonally know just right, outsized I December Just real the I given QX, the

around Just any that. thoughts

Don McGuire

the -- when the go in and tends up all happens down and QX, that's think I seasonally, it's switching retention quarter. But by certainly, the to whatnot.

you'd cetera. dip, see to the bit et the dip but dip, compare we So a actually, year's course, of of a prior

unusual. So there nothing

staying because had we're scores business, with than we're a -- anticipated, that. clients and slight Maria than and NPS mean happy in are we expected, even we're staying they're continue high. I though to we happy. said, declined less as And be decline, less

some see year, whole opportunity we're right for we'll it's but hopefully, the certainly -- with now. in at we're the where So happy retention score

Operator

with question Northcoast next Our comes from Research. Kartik Mehta

Kartik Mehta

something XX and points see Or you getting think could a you and period basis little the a XXX XXX think I'm wondering basis down has the the changed about from versus pricing next in outsized years? unique where you're net over we're just do this and couple you pricing of it's pricing? bit Don, pricing about that maybe previously. historically environment do talked XXX been being you But points

Don McGuire

for question. the thanks Kartik,

difficult on think the on depends me it saying. what guess I because speculate a that's one you are think to for forecasts economic I

are Some knows, higher saying who inflation, not expect but sure. should we

We are being policies and be really or going haven't force some seen that to drive whether the inflation not. put are of bandied about in

that I our to So inflation, the make costs take sure best higher we're opportunity to would or -- and we along. generally say continue but that if value provide will do good passing our there's

for client of do But value rate to that we'll keep long-term we it's pricing. -- make important the sure again, once retention the and all most we it us metric when for to to comes us, about That's the need it's what up. the that do

Kartik Mehta

And the a PEO. follow-up on just

bit there business And this see you could a I in just are pays business? changing that an continue? per lower about the slightly ES. anomaly control kind than anything where pays the of ES being You've per more know lower where industry that's is talked PEO in Is Or a of control the phenomenon. or the of trend this near-term than

Don McGuire

talking talk couple we've and PEO, for about several to we've think of been been and quarters happy I the about last quarters stabilization improvement.

go to and look going better. are things hopefully, So back

drivers. it where now, in we'll But been know, don't there's But at in PEO and been as see particular with segment. it happy I right you any I materializes. per if how than Historically, think we're the growth has better know pays control we're ES has the

I we services. where say industries of stabilization provide will for most that the the quarter, we the saw across

or stabilized. that has in and it us weakness an for was see the particular stabilized, to the area past, in that it in thing been So had financial but -- positive administrative, a of

and for we at looking where So with we're to are improve. comfortable it

Operator

and have question for one comes that with question, last Dolev Mizuho. Dan from We time

Dan Dolev

did you I saying a I the a notice formulation. a lot now you're I slight but continue backlog, quarter, -- pace. I to last albeit you slower change a pace, -- language talked did hire about maybe at and believe know clients talked said or in at we notice moderate

maybe hiatus? it. it obviously, your this would time. than that, starts really Just like want other from to you've more long this be been great. slowing experience, trajectory a maybe train could -- obviously, Is for love rolling, about And one And change? just like and on is results long-term this a doing a just perspective strong more this that know I a

Don McGuire

that guess solid. saying continues environment, very, answer very labor to strong The I and by Dan, that environment the strong, I'd unemployment. be X.X% macro

the think good. fundamentals I are

particular. so optimism And market, an in seems and still be companies lot think of the in that U.S. there I hiring the profitable awful being to and

growth. well for per bodes control all pays and that think I So overall

opportunities be only way do and the also say question we there is in that I environment, And portfolio answer U.S., to to continues way. outside that the of But [indiscernible] it can I that macro operations and the the quite opportunity of we really course, so around we see have solid. the think just would have

Dan Dolev

And a it. HCM. leader now. book again are Got your on off on thought taking page being competitors your congrats a Looks like

So congrats again.

Maria Black

you. Thank

Operator

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

Maria Black

to everyone you thank and for Thanks, joining in ADP. the interest other encouragement Michelle, the and compliments again the and and for

named hot to World's list a ADP has every company as I year me consecutive want because on segments XXth did means distinguished associates the by for environment everything so it's and being that Admired Magazine navigate press. off of and the Most the share it been changing is, Company this recognition This true such a Fortune many XXXX. great testament our for serving very again so that markets really once for in make day. entity the exciting, our across something each to many to a clients clients so many in

this And share you. the to this all accomplishment. well-earned news of congratulations with all on Thanks. I'm ADP So super to proud

Operator

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

Automatic Data Processing (ADP) 29 Jan 252025 Q2 Earnings call transcript